IV.5. Sub-Grant and Loan Agreement for the Metropolitan Council Livable Communities Demonstration Account Grant and Associated Documents for 325 Blake Road
September 20, 2022 Council Report 2022-086
Sub-Grant and Loan Agreement for the Metropolitan Council Livable Communities
Demonstration Account Grant and Associated Documents for 325 Blake Road
Proposed Action
Staff recommends adoption of the following motion: Move to approve Resolution 2022-061
Approving a Grant to Alatus Hopkins MD LLC, a Loan to Alatus Hopkins LIHTC I LLC, and the
Execution and Delivery of Documents in Connection Therewith.
Overview
The Metropolitan Council offers grant funding through its Livable Communities Demonstration
Account Transit Oriented Development (LCDA-TOD) program to support high density development
projects that contribute to a mix of uses along a major transit corridor.
The City, on behalf of Alatus, applied for and received a $1,250,000 LCDA-TOD grant to be used
toward public space infrastructure, wayfinding, and public art for the 325 Blake Road project. The
City entered into a grant agreement with the Metropolitan Council and will act as a pass-through
agency to Alatus and its assigns for the grant.
The City plans to use $1,030,000 of the grant funds to make a subgrant to the developer and use
the remaining $220,000 to make a loan for the eligible activities related to the 116 unit affordable
housing building, so the developer can take advantage of low income housing tax credit programs.
These agreements require Alatus and its assigns to perform any obligations related to the grant
agreement with the Metropolitan Council. The subgrant agreement, loan agreement, mortgage and
note were drafted by the City Attorney. The other associated documents are related to the
underlying financing of the project and have been reviewed by the City Attorney.
Primary Issues to Consider
There are no local match requirements related to the LCDA-TOD grant. City staff will administer
the grant in coordination with Alatus and the Metropolitan Council. The documents in this action
are consistent with the previous approvals granted the developer and the purpose of each
document is detailed in Resolution 2022-061.
Supporting Information
• Resolution 2022-061
• Contract for Private Development
• Partial Assignment and Assumption
Agreement
• LCDA Sub-Grant Agreement
• LCDA Loan Agreement
• LCDA Loan Mortgage
• LCDA Promissory Note
• LCDA Grant Subordination
• Master Subordination Agreement
• Master Disbursing Agreement
_______________________
Jan Youngquist, AICP, Community Development Coordinator
Financial Impact: $______0___Budgeted: Y/N ___ Source: __________
Related Documents (CIP, ERP, etc.): _______________________________________
Notes: _______________________________________________________________
CITY OF HOPKINS, MINNESOTA
RESOLUTION NO. 2022-061
APPROVING A GRANT TO ALATUS HOPKINS MD LLC, A LOAN TO
ALATUS HOPKINS LIHTC I LLC, AND THE EXECUTION AND DELIVERY
OF DOCUMENTS IN CONNECTION THEREWITH
Section 1. Recitals.
1.01. The City of Hopkins, Minnesota (the “City”) and the Housing and Redevelopment
Authority in and for the City of Hopkins (the “Authority”) have previously established Tax Increment
Financing District No. 2-11 (“TIF District 2-11”), a redevelopment district within Redevelopment Project
No. 1 in the City, and adopted a tax increment financing plan therefor (the “2-11 TIF Plan”), in
accordance with Minnesota Statutes, Sections 469.174 through 469.1794, as amended (the “TIF Act”).
1.02. On December 21, 2021, the Board of Commissioners of the Authority (the “Board”)
adopted a resolution approving an amendment to the 2-11 TIF Plan to allow for the pooling of tax
increment revenue from the TIF District 2-11 for housing purposes outside of TIF District 2-11.
1.03. On December 21, 2021, the City Council of the City (the “City Council”) and the Board
adopted resolutions approving the establishment of Tax Increment Financing District No. 1-6 (325 Blake)
(“TIF District 1-6”), a redevelopment district within Redevelopment Project No. 1 in the City, and
adopted a tax increment financing plan therefor in accordance with the TIF Act.
1.04. On December 21, 2021, the City Council and the Board adopted a joint resolution
approving the execution and delivery of a Contract for Private Redevelopment (the “Contract”) with
Alatus Hopkins MD LLC, a Delaware limited liability company (the “Redeveloper”), pursuant to which
the Redeveloper agreed to redevelop the property located at 325 Blake Road in the City (the
“Redevelopment Property”) and construct multiple buildings containing approximately 800 multifamily
units, with 688 rental apartment units and 112 senior cooperative units, meeting certain affordability
levels within each building, approximately 33 for sale town homes, 8,000 square feet of ground-floor
retail, a 1,000-square foot sky lounge, and two 4,500-square foot standalone restaurant pads (the
“Minimum Improvements”). The Contract, as previously approved, has subsequently been revised.
1.05. As part of the Minimum Improvements, the Redeveloper has proposed to construct
approximately 116 multifamily housing units, with affordable levels within Building A as set forth in the
Contract (the “Phase IA, Building A Minimum Improvements”), on the portion of the Redevelopment
Property legally described in EXHIBIT A attached hereto (the “Phase IA, Building A Property”).
1.06. As contemplated in the Contract, the Authority has proposed to make a forgivable loan to
the Redeveloper (the “TIF Loan”) in the principal amount of $3,750,000 from pooled tax increment from
TIF District 2-11 to reimburse the Redeveloper for a portion of the Redeveloper’s redevelopment costs
associated with Phase I of the development.
1.07. As contemplated in the Contract, the Authority has proposed to issue a tax increment
revenue note (the “TIF Note”) in the maximum principal amount of $1,530,000 to the Redeveloper to
reimburse the Redeveloper for a portion of the Redeveloper’s redevelopment costs with respect to the
Phase IA, Building A Minimum Improvements, which TIF Note will be payable from tax increment
revenue generated from property within TIF District 1-6.
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1.08. In order to assist with the costs of the Minimum Improvements, the City, on behalf of the
Redeveloper, applied for and received a Livable Communities Demonstration Account (LCDA) grant (the
“LCDA Grant”) from Metropolitan Council in the total sum of $1,250,000, which will be allocated to the
Minimum Improvements.
1.09. Proceeds of the LCDA Grant are authorized to be used for eligible costs of the Project
(the “Grant-Eligible Activities”), as described, along with other terms and conditions of the LCDA Grant,
in the Livable Communities Demonstration Account Grant Agreement (the “Grant Agreement”) which
was previously approved and executed by the City and Metropolitan Council.
1.10. The City intends to use a portion of the proceeds of the LCDA Grant in the approximate
principal amount of $1,030,000 (the “LCDA Sub-Grant”) to make a grant to the Redeveloper to provide
financing for a portion of the Grant-Eligible Activities.
1.11. The City intends to use the remaining proceeds of the LCDA Grant in the approximate
principal amount of $220,000 (the “LCDA Loan”) to make a loan to the Affordable Housing Redeveloper
to provide financing for the Grant-Eligible Activities with respect to the Phase IA, Building A Minimum
Improvements.
1.12. The Redeveloper has proposed to assign its rights and responsibilities with respect to the
construction of the Phase IA, Building A Minimum Improvements to the Affordable Housing
Redeveloper, which assignment is permissible under the terms of Section 8.2 of the Contract.
1.13. The Redeveloper has proposed to assign its rights and responsibilities with respect to the
Phase IA, Building A Minimum Improvements as well as its interest in the TIF Loan and the TIF Note to
the Affordable Housing Redeveloper, and the Affordable Housing Redeveloper has proposed to assume
the rights and responsibilities of the Redeveloper with respect to the Phase IA, Building A Minimum
Improvements as well as the interest of the Affordable Housing Redeveloper in the TIF Loan and the TIF
Note.
1.14. The Redeveloper also intends to assign to the Affordable Housing Redeveloper all of the
Redeveloper’s interest in and its rights and obligations as the redeveloper under the Declaration of
Restrictive Covenants and the Minimum Assessment Agreement to be executed in connection with the
Phase IA, Building A Minimum Improvements.
1.15. On July 7, 2022, the City issued its Multifamily Housing Revenue Bonds (325 Blake
Apartments), Series 2022A (the “Tax-Exempt Bonds”), in the original aggregate principal amount of
$19,930,000, and its Taxable Multifamily Housing Revenue Bonds (325 Blake Apartments),
Series 2022B (the “Taxable Bonds,” and together with the Tax-Exempt Bonds, the “Bonds”), in the
original aggregate principal amount of $5,840,000. The City loaned the proceeds of the Bonds to the
Affordable Housing Redeveloper (the “Bond Loan”) to provide financing for a portion of the Phase IA,
Building A Minimum Improvements.
1.16. The following documents have been presented to the City Council: (a) a revised Contract
incorporating modifications made since the prior approval of the Contract; (b) a Partial Assignment and
Assumption Agreement (the “Partial Assignment and Assumption Agreement”) between the Authority,
the City, the Redeveloper, and the Affordable Housing Redeveloper pursuant to which the Redeveloper
will assign its rights and responsibilities with respect to the Phase IA, Building A Minimum
Improvements as well as its interest in the Affordable Housing TIF to the Affordable Housing
Redeveloper, the Affordable Housing Redeveloper will assume the rights and responsibilities of the
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Redeveloper with respect to the Phase IA, Building A Minimum Improvements as well as the interest of
the Affordable Housing Redeveloper in the Affordable Housing TIF, and the Authority and the City will
consent to such assignment and assumption; (c) a Sub-Grant Agreement (the “LCDA Sub-Grant
Agreement”) between the City and the Redeveloper pursuant to which the City will make the LCDA
Sub-Grant to the Redeveloper; (d) a Loan Agreement (the “LCDA Loan Agreement”) between the City
and the Affordable Housing Redeveloper pursuant to which the City will make the LCDA Loan to the
Affordable Housing Redeveloper; (e) a Combination Mortgage and Security Agreement by the
Affordable Housing Redeveloper in favor of the City as security for the LCDA Loan; (f) a Note by the
Affordable Housing Redeveloper in favor of the City to evidence the repayment obligations of the
Redeveloper with respect to the LCDA Loan; (g) a Subordination Agreement (the “LCDA Subordination
Agreement”) between the City, as subordinate lender, the Affordable Housing Redeveloper, and The
Huntington National Bank, a national banking association, as the trustee for the Bonds, pursuant to which
the City, as subordinate lender, agrees that the Affordable Housing Redeveloper’s repayment obligations
with respect to the LCDA Loan will be subordinate to the Affordable Housing Redeveloper’s repayment
obligations with respect to the Bonds; (h) a Master Subordination Agreement (the “Master Subordination
Agreement”) between the Authority, the City, the Hennepin County Housing and Redevelopment
Authority (the “County HRA”), Alatus Hopkins MD LLC, a Delaware limited liability company, and the
Affordable Housing Redeveloper, which sets forth the subordination of the various loans, including but
not limited to the TIF Loan, to the Bond Loan; and (i) a Master Loan Disbursing Agreement (the
“Disbursing Agreement”) between the Authority, City, the County HRA, the Affordable Housing
Redeveloper, and First American Title Insurance Company, as the disbursing agent, with respect to the
disbursement of the various loans, including but not limited to the TIF Loan.
Section 2. Approvals.
2.01. The City Council approves the Affordable Housing Redeveloper as the redeveloper with
respect to the Phase IA, Building A Minimum Improvements.
2.02. The Mayor and the City Manager are hereby authorized and directed to execute and
deliver the Contract, the Partial Assignment and Assumption Agreement, the LCDA Sub-Grant
Agreement, the LCDA Loan Agreement, the LCDA Subordination Agreement, Master Subordination
Agreement, and the Master Disbursement Agreement (collectively, the “City Documents”). All of the
provisions of the City Documents, when executed and delivered as authorized herein, shall be deemed to
be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be
in full force and effect from the date of execution and delivery thereof. The City Documents shall be
substantially in the forms on file with the City, which are hereby approved, with such omissions and
insertions as do not materially change the substance thereof, or as the Mayor and the City Manager, in
their discretion, shall determine, and the execution thereof by the Mayor and the City Manager shall be
conclusive evidence of such determination.
2.03. The Mayor and the City Manager are hereby authorized to execute and deliver any and
all documents deemed necessary to carry out the intentions of this resolution, the Contract, and the City
Documents.
Section 3. Effective Date. This resolution shall be effective upon adoption.
Adopted by the City Council of the City of Hopkins, Minnesota on the 20th day of September, 2022.
Mayor
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ATTEST:
City Clerk
HP145-47 (JAE)
821556v1
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DRAFT
September 14, 2022
CONTRACT
FOR
PRIVATE REDEVELOPMENT
By and Between
CITY OF HOPKINS, MINNESOTA
and
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF HOPKINS
and
ALATUS HOPKINS MD LLC
This document drafted by:
KENNEDY & GRAVEN, CHARTERED (SJR)
150 South Fifth Street, Suite 700
Minneapolis, MN 55402
(612) 337-9300
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TABLE OF CONTENTS
PAGE
PREAMBLE ....................................................................................................................................1
ARTICLE I
Definitions
Section 1.1. Definitions................................................................................................................2
Section 1.2. Exhibits ...................................................................................................................7
Section 1.3. Rules of Interpretation .............................................................................................7
Section 1.4. Incorporation of Recitals and Exhibits ....................................................................8
ARTICLE II
Representations and Warranties
Section 2.1. Representations by the City and the HRA ...............................................................8
Section 2.2. Representations and Warranties by the Redeveloper ...............................................9
ARTICLE III
Acquisition of Redevelopment Property; Redevelopment Assistance
Section 3.1. Acquisition of Redevelopment Property ................................................................10
Section 3.2. Issuance of Pay-As-You-Go Note .........................................................................10
Section 3.3. Conditions Precedent to Issuance of Note .............................................................11
Section 3.4. Potential Reduction of Assistance .........................................................................11
Section 3.5 Redeveloper Responsible for Payment of Administrative Costs ...........................13
Section 3.6. Records ..................................................................................................................13
Section 3.7. Purpose of Assistance; No Business Subsidy ........................................................13
ARTICLE IV
Construction of Minimum Improvements
Section 4.1. Construction of Minimum Improvements .............................................................14
Section 4.2. Preliminary and Construction Plans.......................................................................14
Section 4.3. Commencement and Completion of Construction .................................................15
Section 4.4. Certificate of Completion ......................................................................................15
Section 4.5. Housing Affordability Covenants ..........................................................................18
Section 4.6. Affordable Housing Reporting ..............................................................................19
Section 4.7. City Public Improvements .....................................................................................19
Section 4.8. Homeowners’ Associations and Restrictive Covenants ........................................19
Section 4.9. Maintenance ...........................................................................................................19
Section 4.10. Reciprocal Easement and Operating Agreement ...................................................19
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ARTICLE V
Insurance
Section 5.1. Insurance ................................................................................................................20
Section 5.2 Subordination .........................................................................................................22
ARTICLE VI
Taxes; Use of Tax Increment
Section 6.1. Right to Collect Delinquent Taxes .........................................................................22
Section 6.2. Use of Tax Increment.............................................................................................22
Section 6.3. Reduction of Taxes ................................................................................................22
Section 6.4. Qualifications .........................................................................................................24
Section 6.5. Transfer Obligations ..............................................................................................24
Section 6.6. Minimum Assessment Agreement .........................................................................24
ARTICLE VII
Financing
Section 7.1. Mortgage Financing ...............................................................................................25
Section 7.2. HRA’s Option to Cure Default on Mortgage .........................................................26
Section 7.3. Modification; Subordination ..................................................................................26
ARTICLE VIII
Prohibitions Against Assignment and Transfer; Indemnification
Section 8.1. Representation as to Redevelopment .....................................................................26
Section 8.2. Prohibition Against Redeveloper’s Transfer of Property
And Assignment of Agreement .............................................................................26
Section 8.3. Release and Indemnification Covenants ................................................................28
ARTICLE IX
Events of Default
Section 9.1. Events of Default Defined .....................................................................................29
Section 9.2. Remedies on Default ..............................................................................................29
Section 9.3. Termination or Suspension of TIF Note ................................................................30
Section 9.4. No Remedy Exclusive............................................................................................30
Section 9.5. No Additional Waiver Implied by One Waiver .....................................................30
Section 9.6. Attorney Fees .........................................................................................................30
Section 9.7 No Cross-Default ...................................................................................................30
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ARTICLE X
Additional Provisions
Section 10.1. Conflict of Interests; Representatives Not Individually Liable .............................32
Section 10.2. Equal Employment Opportunity ............................................................................32
Section 10.3. Restrictions on Use ................................................................................................32
Section 10.4. Notices and Demands ............................................................................................32
Section 10.5. Counterparts ...........................................................................................................33
Section 10.6. Disclaimer of Relationships ...................................................................................33
Section 10.7. Amendment ............................................................................................................33
Section 10.8. Recording ...............................................................................................................34
Section 10.9. Indemnity ...............................................................................................................34
Section 10.10. Titles of Articles and Sections ...............................................................................34
Section 10.11. Governing Law; Venue ..........................................................................................34
Section 10.12. Provisions Not Merged with Deed .........................................................................34
Section 10.13. Approvals ...............................................................................................................34
Section 10.14. Termination ............................................................................................................34
Section 10.15. Public Art ...............................................................................................................34
Section 10.16. Park Dedication ......................................................................................................34
Section 10.17 Miscellaneous ........................................................................................................35
Section 10.18 Commercial Space n Phase IA – Building C and Phase IB ...................................35
Section 10.19 PUD Agreement/Subdivision.................................................................................35
Section 10.20 Rent Control Provisions .........................................................................................35
Section 10.21. Parking Rental ........................................................................................................36
TESTIMONIUM............................................................................................................................36
SIGNATURES ......................................................................................................................... 36-38
EXHIBIT A LEGAL DESCRIPTION OF THE REDEVELOPMENT PROPERTY
EXHIBIT B DEPICTION OF THE REDEVELOPMENT PROPERTY AND
MINIMUM IMPROVEMENTS
EXHIBIT C PRELIMINARY PLAN DOCUMENTS
EXHIBIT D FORM OF CERTIFICATE OF COMPLETION
EXHIBIT E FORM OF NOTES AND TERMS OF NOTES
EXHIBIT F DECLARATION OF RESTRICTIVE COVENANTS
EXHIBIT G FORM OF MINIMUM ASSESSMENT AGREEMENT
EXHIBIT H FORM OF INVESTMENT LETTER
EXHIBIT I TOTAL DEVELOPMENT COSTS
EXHIBIT J SAMPLE LOOKBACK CALCULATION
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CONTRACT FOR PRIVATE REDEVELOPMENT
This Contract for Private Redevelopment (the “Agreement”) is made this 1st day of
September, 2022, by and between the City of Hopkins, Minnesota, a Minnesota municipal
corporation (“City”), and Housing and Redevelopment Authority in and for the City of Hopkins
(“HRA”), each having their principal office at 1010 1st Street South, Hopkins, Minnesota 55343,
and Alatus Hopkins MD LLC, a Delaware limited liability company, having its principal office at
IDS Center, 80 South 8th Street, Suite 4155, Minneapolis, MN 55402 (the “Redeveloper”).
WITNESSETH:
WHEREAS, the HRA previously found that there exists within the community a building
that had a blighting influence on surrounding properties and was structurally substandard due to
its poor phys ical condition or functional obsolescence and which, because of those conditions,
threatened the health, safety and welfare of the community; and
WHEREAS, the HRA has previously caused demolition of a building located at the
Redevelopment Property as hereinafter defined; and
WHEREAS, the HRA finds that it is in the public interest, helpful for the tax base and
beneficial for the health, safety and welfare of the community as a whole to remove vacant,
underutilized, obsolete, and structurally substandard buildings and to replace them with new life-
cycle housing and ancillary commercial uses; and
WHEREAS, the HRA finds that, due to market conditions which exist today and are
likely to persist for the foreseeable future, the private sector alone is not able to accomplish
redevelopment of the type needed within the community and, therefore, such will not occur
without public intervention; and
WHEREAS, the HRA was created pursuant to Minnesota Statutes, Sections 469.001-
469.047 (the “Act”) and was authorized to transact business and exercise its powers by a
resolution of the City Council of the City pursuant to the Act; and
WHEREAS, in order to foster the redevelopment described above, the City established its
Redevelopment Project No. 1, as defined in the Act, providing for the development and
redevelopment of certain areas located within the City (which redevelopment project is
hereinafter referred to as the “Project”), to implement the goals and objectives thereof, all
pursuant to the Act; and
WHEREAS, the Redeveloper has presented to the HRA a proposal wherein the
Redeveloper will redevelop 325 Blake Road North (the “Redevelopment Property”) through
the construction on the Redevelopment Property of multiple buildings containing
approximately 804 multi-family units, with 692 units of apartments, and 112 senior cooperative
units, with the affordability levels within each building specified below in Section 4.5;
construction of approximately 33 for sale town homes, 8,000 sq. ft. of ground floor retail, 1,000
sq. ft. sky lounge and two (2) 4,500 sq. ft. standalone restaurant pads; with Total Development
Costs estimated to be approximately $330,000,000; and
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WHEREAS, as part of its proposal the Redeveloper has requested that the HRA
create a tax increment financing district encompassing the Redevelopment Property and
use a portion of the tax increment generated from the redeveloped Redevelopment
Property to reimburse the Redeveloper for a portion of the Redeveloper's redevelopment
costs; and
WHEREAS, the HRA established Tax Increment Financing District No. 1-6: 325 Blake
(a “redevelopment district”) and adopted a tax increment financing plan related thereto, all
pursuant to Minnesota Statutes, sections 469.174 through 469.1799; and
WHEREAS, the Redeveloper has proposed to redevelop the Redevelopment Property
through a project which the HRA believes is in the vital and best interests of Hopkins and the
health, safety, morals, and welfare of its residents, and in accord with the public purposes and
provisions of the applicable state and local laws and requirements for which the Project and Tax
Increment Financing District No. 1-6: 325 Blake were established; and
WHEREAS, the Redeveloper would not undertake the redevelopment of the Project
without the tax increment financing assistance described in this Agreement; and
WHEREAS, the HRA believes that the redevelopment of the Project pursuant to the
Redeveloper's proposal and the fulfillment generally of this Agreement, are in the vital and
best interests of the City and the health, safety, morals, and welfare of its residents, and in
accord with the public purposes and provisions of the applicable State and local laws and
requirements under which the Project has been undertaken and is being assisted.
NOW, THEREFORE, in consideration of the covenants and the mutual obligations of the
parties hereto, each of them does hereby covenant and agree with the other as follows:
ARTICLE I
Definitions
Section 1.1. Definitions. In this Agreement the following terms shall have the meanings
given unless a different meaning clearly appears from the context:
“Administrative Costs” means the administrative expenses incurred by HRA as defined
in section 469.174, subd. 14 of the TIF Act.
“Agreement” means this Agreement, as the same may be from time to time modified,
amended, or supplemented.
“Assessor” means the county assessor of Hennepin County.
“Available Tax Increment” means, with respect to each Phase, up to 95 percent of the
Tax Increment paid to the HRA by the County with respect to that Phase of the Redevelopment
Property, with the Minimum Improvements on that Phase.
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“Certificate of Completion” means the certificate, in substantially the form attached
hereto as Exhibit D, which will be provided to the Redeveloper pursuant to Article IV of this
Agreement.
“City” means the City of Hopkins, Minnesota, a municipal corporation under the laws of
Minnesota.
“City Public Improvements” means the construction of the Spine Road between Blake
Road N and Lake Street NE.
“Construction Plans” means the final plans for construction of each Phase of the
Minimum Improvements, which shall be submitted by the Redeveloper pursuant to section 4.2 of
this Agreement.
“County” means Hennepin County, Minnesota.
“Declaration of Restrictive Covenants” means, as to Phases IA (Building A), IIA
(Building B), and IC (Building D), the Declaration of Restrictive Covenant for each of those
Phases between the HRA and the Redeveloper in substantially the form set forth in Exhibit F
attached hereto.
“Event of Default” or “default” means an action by the Redeveloper or HRA listed in
Article VIX of this Agreement.
“Holder” means the owner of a Mortgage.
“Housing Unit” means the housing units constructed as part of the Minimum
Improvements.
“HRA Act” means the Housing and Redevelopment Authorities Act, which is codified at
Minnesota Statutes, Sections 469.001 through 469.047, as amended.
“Lender” means any lender who finances the construction or operation of a Phase of the
Minimum Improvements.
“Material Change” means a change in the Construction Plans that will have a material
adverse effect on the generation of Tax Increment from the Minimum Improvements or that
materially reduces the number of Housing Units, or a change in the exterior elements of the
applicable Phase (as hereinafter defined) that materially adversely affects the original character and
visual preference that was approved by the City and HRA.
“Maturity Date” means, as to each Note, the date that Note has been paid in full or
terminated, whichever is earlier.
“Minimum Assessment Agreement” means, as to each Phase, the Minimum Assessment
Agreement for that Phase between the HRA, the Redeveloper, and the County assessor in
substantially the form attached hereto as Exhibit G.
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“Minimum Improvements” means the City Public Improvements plus the following:
The construction of multiple buildings containing approximately 804 multi-family units,
with 692 units of apartments, and approximately 112 senior housing units in a building
organized as a cooperative, with affordability levels within each building noted in the
table below:
Bldg C
Market
Rate
Bldg D
Mixed
Income
Bldg A
LIHTC
Bldg B
Sr.
Coop
Total
%
Affordable
of TOTAL
Units
No. of Units 389 187 116 112 804 N/A
30% AMI 0 0 3 0 3 1%
50% AMI 0 0 107 0 107 13%
60% AMI 0 38 6 12 56 7%
80% AMI 0 38 0 0 38 5%
Total Affordable 0 76 116 12 204 26%
% Affordable by
Building
0% 40% 100% 11% 25%
In addition, construction of approximately 33 for-sale town homes, 8,000 sq. ft. of ground
floor retail, 1,000 sq. ft. sky lounge and two (2) 4,500 sq. ft. standalone restaurant pads.
Details of each component of the Minimum Improvements, hereinafter individually
designated as a separate Phase are noted below in the table.
Phase Use
Phase IA – Building
A (Lot 2, Block 2 of
Plat)
6 Story building with approximately 116 LIHTC apartments
with 100% of the units affordable at or below 60% of AMI and
approximately 77 underground and surface parking stalls. Also
includes entry plaza available for public use.
Phase IB – Building
C (Lot 4, Block 1 of
Plat)
Single building with a 14-Story component consisting of
approximately 214-units of market rate apartments with up to
15% of the units designated as hotel units, approximately 8,000
sq. ft. of ground floor retail and a 1,000 sq/ft sky lounge and a 5-
story component consisting of approximately 175-units of
market rate apartments and approximately 520 above-ground
parking stalls. Also includes gateway plaza, cascade promenade
and tower plaza available for public use.
Phase IC – Building
D (Lot 3, Block 1 of
Plat)
5-Story building with approximately 187-units of mixed income
apartments in which 20% of the units (38) are affordable at or
below 60% AMI and 20% of the units (38) are affordable at or
below 80% AMI plus approximately 277 above-ground parking
stalls. Also includes woonerf available for public use.
Phase ID (Lots 1
and 2, Block 1 of
Plat)
Two single-story 4 ,500 sq. ft. restaurant pads and greenway
commons, 1,400 sq. ft. boathouse and rental center and pavilion,
with the greenway commons and pavilion available for public
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Phase Use
use
Phase IIA –
Building B (Lot 1,
Block 2 of Plat)
5-Story building with approximately a 112-unit senior
cooperative, in which 12 units (approximately 11%) are
affordable to persons at or below 60% AMI and approximately
184 underground parking stalls. Also includes gateway plaza
available for public use.
Phase IIB – Town
Homes (Outlot C of
Plat)
Approximately 33 for-sale town home units
Total Development Costs for all Phases of the Minimum Improvements are estimated to
be approximately $330,000,000. The Minimum Improvements are generally described
and depicted on Exhibit B attached hereto.
“Minimum Market Value” means, for all Phases collectively, $222,000,000. The
Minimum Market Value for each Phase is the amount that the Redeveloper and the HRA agree to
in the Minimum Assessment Agreement for that Phase.
“Mortgage” means any mortgage made by the Redeveloper that encumbers any Phase of
the Redevelopment Property and that is a permitted encumbrance pursuant to the provisions of
Article VII hereof.
“Note” and “Notes” means the taxable Tax Increment Revenue Notes, in substantially the
form set forth in Exhibit E, to be delivered by the HRA to the Redeveloper or its designee
pursuant to Article III of this Agreement.
“Phase” means each of the phases of the Minimum Improvements identified above in the
definition of Minimum Improvements.
“Plat” means that certain subdivision plat or map of the Redevelopment Property entitled
“Mile 14 on Minnehaha Creak,” recorded on July 12, 2022 in the official records of Hennepin
County as Document No. 5957625 (Torrens) and as Document No. 11126218 (Abstract).
“Preliminary Plans” means, as to each Phase, the preliminary plans for construction of
the Minimum Improvements on that Phase; the preliminary plans for all Phases have been
submitted by the Redeveloper and approved by the HRA and are attached hereto as Exhibit C.
“Public Redevelopment Costs” means, site preparation costs, including demolition, costs
of soil correction, and infrastructure improvements on the Redevelopment Property, costs of
constructing affordable housing, and any other costs eligible to be reimbursed with tax
increment.
“Qualifying Costs” means, as to each Phase, the cost of, site preparation, demolition,
utility installation, landscaping, grading, earthwork, footings, foundations, retaining walls, storm
water ponding, structured, underground and surface parking, and all other expenditures made by
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the Redeveloper related to completion of the Minimum Improvements on that Phase, which the
HRA intends to partially reimburse through the Note for that Phase.
“Redeveloper” has the meaning set forth in the preamble of this Agreement.
“Redevelopment Assistance” means the financial assistance to be offered by the HRA to
the Redeveloper through issuance of the Notes.
“Redevelopment Plan” means the Project and the Tax Increment Financing District
No. 1-6: 325 Blake, which was approved by the HRA on December 21, 2021, and by the City on
December 21, 2021.
“Redevelopment Property” means those properties which are included in the plat of
MILE 14 ON MINNEHAHA CREEK with the exception of Outlots A and B, which will be
retained by the Minnehaha Watershed District. The Redevelopment Property is legally described
in Exhibit A attached hereto.
“HRA” has the meaning set forth in the preamble of this Agreement.
“State” means the state of Minnesota.
“Substantial Completion” means, as to each Phase, completion of the Minimum
Improvements in that Phase to a degree allowing the issuance of a Certificate of Occupancy by
the City’s building official.
“Tax Increment” means, with respect to each Phase, the tax increment, as that term is
defined in Minnesota Statutes, Section 469.174, subd. 25, that is paid to the HRA by the County
with respect to that Phase of the Redevelopment Property, including the Minimum
Improvements on that Phase.
“Tax Increment Financing District” or TIF District” means Tax Increment Financing
District No. 1-6: 325 Blake.
“TIF Act” means the Tax Increment Financing Act, which is codified at Minnesota
Statutes, sections 469.174 through 469.1799, as amended.
“TIF Plan” means the tax increment plan for Tax Increment Financing District No. 1-6:
325 Blake, which was approved by the HRA on August 17, 2021, and by the City on August 17,
2021.
“Termination Date” means, as to each Phase, the earlier of (i) the termination of Tax
Increment Financing District No. 1-6: 325 Blake, which is estimated to be after 25 years after
the date of receipt of the first increment, or (ii) the date the Note for that Phase has been paid
through Available Tax Increment or terminated.
“Total Development Costs” means the total development costs of the Minimum
Improvements. A line-item estimate of the Total Development Costs is attached hereto as
Exhibit I, which reflects the Redeveloper’s current projections for each line-item category of
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costs comprising the Total Development Costs for each applicable Phase that will receive Tax
Increment.
“Transfer” has the meaning set forth in Section 8.2(a) hereof.
“Unavoidable Delays” means delays which are the direct result of unanticipated adverse
weather conditions; pandemics (including the global pandemic commonly known as the
coronavirus or COVID-19); strikes or other labor troubles; shortages of materials or labor; fire or
other casualty to the Minimum Improvements; litigation commenced by third parties which, by
injunction or other similar judicial action, directly results in delays; or, except those of the HRA
or the City reasonably contemplated by this Agreement, any acts or omissions of any federal,
State or local governmental unit which directly result in delays in construction of the Minimum
Improvements; approved changes to the Construction Plans that result in delays; delays caused
by the discovery of any previously unknown adverse environmental condition on or within the
Redevelopment Property to the extent reasonably necessary to comply with federal and state
environmental laws, regulations, orders or agreements; unanticipated future local events
occurring within such proximity of the Redevelopment Property, and not caused by nor within
the control of the Redeveloper, having a significantly adverse impact upon the marketability and
reasonable profitability of the Minimum Improvements; and any other cause or force majeure
beyond the control of the Redeveloper which directly results in delays.
Section 1.2. Exhibits. The following exhibits are attached to and by reference made a
part of this Agreement:
Exhibit A. Legal description of the Redevelopment Property
Exhibit B. Depiction of the Redevelopment Property and Minimum Improvements
Exhibit C. Preliminary Plans
Exhibit D. Form of Certificate of Completion
Exhibit E. Form of Notes and Terms of Notes
Exhibit F. Declaration of Restrictive Covenants
Exhibit G. Form of Minimum Assessment Agreement
Exhibit H. Form of Investment Letter
Exhibit I. Total Development Costs
Exhibit J. Sample Lookback Calculation
Section 1.3. Rules of Interpretation. (a) This Agreement shall be interpreted in
accordance with and governed by the laws of Minnesota.
(b) The words “herein” and “hereof” and words of similar import, without reference
to any particular section or subdivision, refer to this Agreement as a whole rather than any
particular section or subdivision hereof.
(c) References herein to any particular section or subdivision hereof are to the section
or subdivision of this Agreement as originally executed.
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(d) Any titles of the several parts, articles and sections of this Agreement are inserted
for convenience and reference only and shall be disregarded in construing or interpreting any of
its provisions.
Section 1.4. Incorporation of Recitals and Exhibits. 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.
ARTICLE II
Representations and Warranties
Section 2.1. Representations by the City and the HRA. The City and the HRA make the
following representations as the basis for the undertaking on their part herein contained:
(a) The City is a Minnesota municipal corporation duly organized under the laws of
the State of Minnesota. The City has the authority to enter into this Agreement and carry out its
obligations hereunder.
(b) The HRA is a housing and economic development authority duly organized and
existing under the HRA Act. HRA has the authority to enter into this Agreement and carry out
its obligations hereunder.
(c) The individual(s) executing this Agreement and related agreements and
documents on behalf of the City or the HRA have the authority to do so and to bind the City or
the HRA by their actions.
(d) The Redevelopment Project No. 1 for the HRA is a development district within
the meaning of the Minnesota Statutes, section 469.125, subd. 9.
(e) TIF District No. 1-6: 325 Blake is a redevelopment tax increment financing
district within the meaning of the TIF Act and was created, adopted and approved in accordance
with the TIF Act. The City and the HRA have taken all required actions to create the TIF
District as a redevelopment district within Minnesota Statute 469.174, Subdivision 10 and have
adopted and approved the TIF Plan pursuant to the TIF District and TIF Act.
(f) There are no previous agreements to which the City or the HRA is a party
pertaining to the Redevelopment Property which would preclude the parties from entering into
this Agreement or which would impede the fulfillment of the terms and conditions of this
Agreement.
(g) The activities of the City and the HRA pursuant to this Agreement are undertaken
pursuant to the Redevelopment Plan and are for the purpose of redevelopment of the
Redevelopment Property.
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(h) The City and the HRA will act in a timely manner to consider all approvals
required under this Agreement and will cooperate with the Redeveloper in seeking consideration
by the City of approvals which must be granted by the City.
Section 2.2. Representations and Warranties by the Redeveloper. The Redeveloper
makes the following representations and warranties as the basis for the undertaking on its part
herein contained:
(a) The Redeveloper is a limited liability company validly existing under the laws of
the State of Delaware and authorized to do business in the State of Minnesota. The Redeveloper
has the authority to enter into this Agreement and carry out its obligations hereunder.
(b) The Redeveloper will attempt to acquire the Redevelopment Property in fee title.
(c) The persons executing this Agreement and related agreements and documents on
behalf of the Redeveloper have the authority to do so and to bind the Redeveloper by their
actions.
(d) Upon acquisition of the Redevelopment Property, the Redeveloper will demolish
the existing improvements, if any, and construct the Minimum Improvements in substantial
accordance with the terms of this Agreement, the Redevelopment Plan, the TIF Plan, the
Construction Plans and all local, State and federal laws and regulations, including, but not
limited to, environmental, zoning, building code and public health laws and regulations.
(e) The Redeveloper will apply for and use all reasonable efforts to obtain, in a
timely manner, all required permits, licenses and approvals from the HRA and the City, and will
meet, in a timely manner, the requirements of all applicable local, State, and federal laws and
regulations which must be obtained or met before the Minimum Improvements may be lawfully
constructed or used for their intended purpose. The Redeveloper did not obtain a building permit
for any portion of the Minimum Improvements before December 21, 2021, the date of approval
of the TIF Plan for the TIF District.
(f) The Redeveloper has analyzed the economics of acquisition of the
Redevelopment Property, the cost of site improvements, including installation of any necessary
utilities and demolition of the improvements currently thereon and construction of the Minimum
Improvements and concluded that, absent the Redevelopment Assistance to be offered under this
Agreement, it would not undertake this project.
(g) 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 provisions of any corporation or company organizational documents or
any evidence of indebtedness, agreement or instrument of whatever nature to which the
Redeveloper is now a party or by which it is bound, or constitutes a default under any of the
foregoing.
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ARTICLE III
Acquisition of Redevelopment Property; Redevelopment Assistance
Section 3.1. Acquisition of Redevelopment Property. The Redeveloper is in the process
of acquiring the Redevelopment Property in fee. The HRA makes no representations to the
Redeveloper regarding the suitability of the Redevelopment Property or the Minimum
Improvements for the use and purpose intended by the Redeveloper.
Section 3.2. Issuance of Pay-As-You-Go Notes. (a) In consideration of the Redeveloper
constructing the Minimum Improvements and to finance the reimbursement of the Qualifying
Costs, subject to all terms and conditions of this Agreement, the HRA will issue and the
Redeveloper will purchase the Notes in the maximum principal amount up to $31,700,000,
collectively for all Phases, in public assistance for Qualifying Costs, in substantially the form set
forth in Exhibit E. The HRA and the Redeveloper agree that the consideration from the
Redeveloper for the purchase of the Note for each Phase will consist of the Redeveloper’s
payment of the Qualifying Costs for that Phase that are eligible for reimbursement with Tax
Increment and that are incurred by the Redeveloper in at least the maximum principal amount of
the Note for that Phase. Currently it is anticipated that approximately $3,750,000 will be from
TIF Spending Plan funds from TIF District 2-11 in the form of a loan and provided up front to
pay for Qualifying Costs as part of the Phase IA development. In addition, the HRA will
reimburse the Redeveloper with Tax Increment generated from the Minimum Improvements for
the remaining amount up to a maximum principal amount of $27,950,000. The HRA’s financial
consultant will complete an analysis with respect to each Phase when construction is ready to
commence on that Phase to determine the amount and term of the assistance to be provided to
that Phase; provided, however, with respect to Phase IA, the HRA’s financial consultant has
determined the amount of assistance for Phase IA to be $1,530,000. Payments from TIF District
1-6: 325 Blake will be made through the Notes issued on a pay-as-you-go basis, with one Note
for each Phase, assuming up to 95% of increment at the rate of the lesser of the rate of 4% per
annum or the Redeveloper’s actual mortgage financing rate. The Note for each Phase will be
issued upon the City’s issuance of a final Certificate of Occupancy for that Phase and proof of
expenditure related to the Qualifying Costs for that Phase. The HRA will deliver the Note for
each Phase upon satisfaction by the Redeveloper of all the conditions precedent with respect to
that Phase specified in section 3.3 of this Agreement. The HRA agrees that the Note for each
Phase may be issued to Redeveloper’s designee of such Phase, subject to Section 3.3 of this
Agreement and if the designee has assumed the obligations such Phase and entered into a partial
assignment and assumption agreement with the City, the HRA, and the Redeveloper. Each Note
will stand alone, and that there will be no cross-default provision in the Notes that allows the
HRA to terminate or suspend payment under one Note with respect to a default under this
Agreement with respect to another Phase (a Phase other than the one which the Note was issued).
(b) The Redeveloper understands and acknowledges that the HRA makes no
representations or warranties regarding the amount of Available Tax Increment, or that revenues
pledged to the Notes will be sufficient to pay the principal of and interest on the Notes. Any
estimates of Tax Increment prepared by the HRA or its financial advisors in connection with the
TIF District or this Agreement are for the sole benefit of the HRA and are not intended as
representations on which the Redeveloper may rely.
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(c) At the HRA’s discretion, the parcels containing Phase ID, Phase IIA – Building B
and Phase IIB – Town Homes may be decertified from the TIF district as development
commences since no assistance is required for those Phases.
Section 3.3. Conditions Precedent to Issuance of Notes. Notwithstanding anything in
this Agreement to the contrary, the HRA shall not be obligated to issue the Note with respect to a
Phase until all of the following conditions precedent have been satisfied with respect to that
Phase:
(a) The Redeveloper or its respective affiliate, subject to Article VIII hereof, has
acquired the Redevelopment Property in fee;
(b) The Redeveloper has submitted and the HRA has approved the Construction
Plans;
(i) The Redeveloper has constructed the Minimum Improvements on that
Phase and the HRA has issued the Certificate of Completion for that Phase;
(c) The Redeveloper has completed the City Public Improvements and such
Improvements have been accepted by the City.
(d) The Redeveloper has submitted evidence it has paid for the Qualifying Costs,
including paid receipts and lien waivers, for that Phase;
(e) The Redeveloper has reimbursed the HRA for all of its administrative costs
incurred in conjunction with the processing of Redeveloper’s request with respect to that Phase;
(f) The Redeveloper has submitted the Investment Letter for the applicable Phase and
Note; and
(g) There has been no Event of Default on the part of the Redeveloper which has not
been cured.
Section 3.4. Potential Reduction of Assistance. The HRA will complete a lookback for
each applicable Phase that receives TIF assistance.
(a) Generally. The financial assistance to the Redeveloper under this Agreement is
based on certain assumptions regarding likely performance of Phase IB - Building C and
Phase IC - Building D including operating revenues, expenses and development costs of
constructing these Phases. The HRA and the Redeveloper agree that the actual financial
performance of Phase IB - Building C and Phase IC - Building D will be reviewed at the times
described in this Section, and that the amount of tax increment assistance provided under
Section 3.2 will be adjusted accordingly. The HRA and the Redeveloper further agree that, upon
execution of this Agreement, the Redeveloper shall provide the HRA and its municipal advisor
(the “Consultant”) with the Pro Forma Financial Statements showing a target Cash on Cost
Return of 7%.
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(b) Definitions. For the purposes of this Section, the following terms have the
following meanings:
“Calculation Date” means the earliest of (A) 90 days after the earlier of (i) the
date of Stabilization of the either Phase; (ii) two years after the date of completion of
either Phase, as evidenced by the City’s issuance of a Certificate of Completion pursuant
to Section 3.3: or (B) at least 30 days prior to sale of either Phase
“Cash on Cost Return” means NOI divided by the applicable Phase’s actual Total
Development Costs, calculated as set forth in the sample lookback calculation attached as
Exhibit J.
“NOI” means total annual income and other project-derived annual revenue,
including payments under the TIF Note, less Operating Expenses, which exclude debt
service payments. For purposes of the Cash on Cost Return calculation on the
Calculation Date, (i) revenue shall be based upon 95% occupancy regardless of whether
the average occupancy for the measured period is higher or lower than 95%, (ii) revenue
for periods after the Calculation Date shall be inflated by 2.5% annually, and (iii)
Operating Expenses for periods after the Calculation Date, shall be inflated by 2.5%
annually.
“Operating Expenses” means reasonable and customary expenses incurred in
operating the applicable Phase, consistent with the Pro Forma Financial Statement,
including deposits to commercially reasonable capital replacement reserves and payment
of real estate taxes, excluding debt service payments.
“Pro Forma Financial Statement” the applicable Phase’s cash flow pro forma
model financial statement projecting future returns, a summary of which is attached to
this Agreement as Exhibit J.
“Stabilization” means the calendar month-end date on which the applicable Phase
has first achieved an average occupancy of 90% during the preceding 12 calendar
months, or such earlier date as may be requested by the Redeveloper but, for purposes of
the Cash on Cost Return calculation, assuming 95% occupancy notwithstanding actual
occupancy rate as of such date.
“Total Project Cost” means the total expenditures incurred to complete
development of the applicable Phase inclusive of land acquisition, hard construction
costs, soft costs and financing costs as approved by Redeveloper’s senior construction
debt lender.
(c) On the Calculation Dates, the Redeveloper of the applicable Phase shall deliver to
the HRA and Consultant, at a minimum, (i) the Redeveloper’s actual financial statement, in the
same form as the Pro Forma Financial Statement submitted to the HRA pursuant to clause (1)
above and showing NOI, and such other financial information as the Consultant shall reasonably
require, for trailing 12-month period preceding the Calculation Date calculated as of the
Calculation Date as provided herein and as set forth in the Pro Forma Financial Statement and
(ii) evidence, satisfactory to the HRA, of its Total Project Cost.
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(d) The average annual Cash on Cost Return shall be calculated by the Consultant
based on the applicable Phase financial statement submitted to the HRA pursuant to clause (3)
above, with actual incurred Total Project Cost and all elements of NOI determined in accordance
with generally accepted accounting principles.
(e) If the average annual Cash on Cost Return does not exceed 7% over the term of
the TIF Note, the TIF Note will remain set at the principal amount established in Section 3.2.
(f) If on the Calculation Date, the average annual Cash on Cost Return exceeds 7%,
then the principal balance of the TIF Note will be reduced by an amount that results in a
stabilized average annual Cash on Cost Return equal to 7% over the term of the TIF Note (the
“Participation Amount”). The calculation for the reduction shall be completed as noted in the
TIF Lookback Calculation Example in Exhibit J and shall be based upon the present value of the
reduced number of years of TIF per the original TIF Run utilized to size the original note for the
applicable Phase. Such reduction will be effective upon delivery to the Redeveloper of a written
notice stating the Participation Amount as determined by the Consultant in accordance with this
Section, accompanied by the Consultant’s report and the Redeveloper shall deliver the TIF Note
in exchange for a new TIF Note in the principal amount reduced by the Participation Amount.
Section 3.5. Redeveloper Responsible for Payment of Administrative Costs. The City
and HRA acknowledge the Redeveloper made an escrow deposit in the amount of $25,000 to pay
the Administrative Costs of the City and the HRA. The City and the HRA will use such funds to
pay “Administrative Costs,” which term means out-of-pocket costs incurred by the City and the
HRA, together with staff and consultant costs of the City and the HRA, all attributable to or
incurred in connection with the negotiation and preparation of this Agreement, the TIF Plan, and
other documents and agreements in connection with the establishment of the TIF District and
redevelopment of the Redevelopment Property, and not previously paid by the Redeveloper. The
Redeveloper shall pay all other normal and customary City fees and expenses for the approval
and construction of the Minimum Improvements. At the Redeveloper’s request, but no more
often than monthly, the HRA will provide the Redeveloper with a written report including
invoices, time sheets or other comparable evidence of expenditures for Administrative Costs and
the outstanding balance of funds deposited. At any time the deposit drops below $1,000, the
Redeveloper shall replenish the deposit in the amount of $10,000 within thirty (30) days after
receipt of written notice thereof from the HRA. If at an y time the HRA or the City determines
that the deposit is insufficient to pay Administrative Costs, the Redeveloper is obligated to pay
such shortfall within fifteen (15) days after receipt of a written notice from the HRA containing
evidence of the unpaid costs. If Administrative Costs incurred, and reasonably anticipated to be
incurred are less than the deposit by the Redeveloper, the HRA shall return to the Redeveloper
any funds not anticipated to be needed.
Section 3.6. Records. The HRA and its representatives will have the right at all
reasonable times after reasonable notice to inspect, examine and copy invoices paid by
Redeveloper and/or its general contractor relating to the Minimum Improvements and the
Qualifying Costs for which the Redeveloper will be reimbursed under the Notes.
Section 3.7. Purpose of Assistance; No Business Subsidy. The parties agree and
understand that the assistance being provided by the HRA under this Agreement does not
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constitute a "business subsidy" within the meaning of the Business Subsidy Act, Minnesota
Statutes, Sections l16J.993 to l16J.995, because the assistance is being provided for development
and housing purposes and the Redeveloper's investment in the Redevelopment Property and site
preparation will exceed 70% of the County Assessor’s current year's estimated market value for
the Redevelopment Property “Business subsidy” within the meaning of Minnesota Statutes,
Sections 116J.993 to 116J.995.
ARTICLE IV
Construction of Minimum Improvements
Section 4.1. Construction of Minimum Improvements. If the Redeveloper or its affiliate
acquires the Redevelopment Property in accordance with the terms of this Agreement, the
Redeveloper or such affiliate agrees that it will construct the Minimum Improvements on the
Redevelopment Property in accordance with the Construction Plans. The Redeveloper
acknowledges that, in addition to the requirements of this Agreement, construction of the
Minimum Improvements will necessitate compliance with other reviews and approvals by the
City and possibly other governmental agencies and, to the extent such approvals have not already
been obtained, agrees to submit all applications for and pursue to their conclusion all other
approvals needed prior to constructing the Minimum Improvements.
Section 4.2. Preliminary and Construction Plans. (a) The Redeveloper has submitted
and the City and the HRA have approved the Preliminary Plans listed in Exhibit C attached
hereto. Prior to beginning construction on the Minimum Improvements, the Redeveloper shall
submit dated Construction Plans to the City and the HRA. The Construction Plans shall provide
for the construction of the Minimum Improvements and shall be in substantial conformity with
the Preliminary Plans and this Agreement. HRA will approve the Construction Plans for each
Phase if they (1) are consistent with the Preliminary Plans; (2) conform to all applicable federal,
State and local laws, ordinances, rules and regulations; (3) are adequate to provide for the
construction of the Minimum Improvements; (4) conform to the State building code; and (5) if
there has occurred no uncured Event of Default on the part of the Redeveloper. The HRA agrees
to approve or reject each set of proposed Construction Plans for each Phase within 30 days after
it receives them. The HRA agrees to detail its reasons for disapproving any Construction Plans
and to explain which of the four criteria in the preceding sentence that it is relying on. If the
HRA does not approve or disapprove any proposed Construction Plans within 30 days after
receiving them, the HRA will be deemed to have approved them. The HRA will also be deemed
to have approved the Construction Plans if the City issues a building permit for the Minimum
Improvements. Except as otherwise set forth herein, no approval by HRA shall relieve the
Redeveloper of the obligation to comply with the terms of this Agreement, the terms of all
applicable federal, State and local laws, ordinances, rules and regulations in the construction of
the Minimum Improvements. Except as otherwise set forth herein, no approval by HRA shall
constitute a waiver of an Event of Default.
(b) If the Redeveloper desires to make any Material Change to any Construction
Plans, the Redeveloper shall submit the proposed change to the HRA for its prior written
approval. If the proposed change is consistent with the Preliminary Plans or is otherwise
acceptable to the HRA and meets all other requirements of section 4.2(a) above, the HRA shall
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approve the proposed change. Such change in the Construction Plans shall be deemed approved
by the HRA unless rejected, in whole or in part, by written notice by the HRA to the
Redeveloper within twenty (20) business days after the Redeveloper submits the proposed
change for approval. The HRA agrees to set forth in detail its reasons for any rejection.
Section 4.3. Commencement and Completion of Construction. Subject to Unavoidable
Delays, the Redeveloper shall commence construction of each Phase of the Minimum
Improvements by the Commencement Date, and substantially complete construction of each
Phase by the Completion Date as set forth below. For the purpose hereof, “Commence” shall
mean beginning of physical improvement to the Property for the respective Phase, including
excavation, or footings and in the case of Phase I, mass grading other physical site preparation
work. “Complete” shall mean that the Minimum Improvements are sufficiently complete for the
issuance of a final Certificate of Occupancy.
Phase Commencement Date Completion Date
Phase IA – Building A December 31, 2022 June 30, 2025
Phase IB – Building C December 31, 2022 June 30, 2025
Phase IC – Building D December 31, 2023 June 30, 2025
Phase ID – Rest/Common December 31, 2024 June 30, 2026
Phase IIA – Building B December 31, 2023 June 30, 2027
Phase IIB – Town Homes December 31, 2022 June 30, 2026
The Redeveloper and the HRA agree that the dates for each Phase of the construction schedule
may be revised based upon timing of actual construction schedules, financing, market conditions,
etc. Revisions to the dates of each Phase of the construction schedule shall not require approval
or further action by the HRA and may be approved administratively by staff and legal counsel,
so long as such revisions are no more than 18 months from each Phase of the construction
schedule as noted above. Any revision to the dates beyond 18 months for each Phase in the
construction schedule shall require renegotiation between the parties.
All work with respect to the Minimum Improvements to be constructed or provided by
the Redeveloper on the Redevelopment Property shall be in conformity with the Construction
Plans. The Redeveloper shall make such reports to the HRA regarding construction of the
Minimum Improvements as the HRA deems necessary or helpful in order to monitor progress on
construction of the Minimum Improvements.
Section 4.4. Certificates of Completion. (a) After Substantial Completion of the
Minimum Improvements in each Phase in accordance with the Construction Plans for that Phase
and all terms of this Agreement and at the written request of the Redeveloper, the HRA will,
within 20 days thereafter, furnish the Redeveloper with a Certificate of Completion for that
Phase in the form of Exhibit D attached hereto. The HRA agrees that the Minimum
Improvements in each Phase will be completed and the Redeveloper will be entitled to receive
and record a Certificate of Completion for that Phase when the City has issued a final Certificate
of Occupancy for the Minimum Improvements in that Phase and all site improvements in the
Phase have been substantially completed in accordance with the approved Construction Plans for
that Phase. Such certification by HRA shall be a conclusive determination of satisfaction and
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termination of the agreements and covenants in this Agreement with respect to the obligations of
the Redeveloper to construct the Minimum Improvements in the relevant Phase and the dates for
the beginning and completion thereof. Following issuance of the Certificate of Completion for a
Phase pursuant to this section, the sole outstanding obligation of either Party is for the HRA to
issue the Notes and to make payments thereunder, subject to the terms of this Agreement and the
Notes.
(b) Each Certificate of Completion shall be in such form as will enable it to be
recorded in the proper County office for the recordation of deeds and other instruments
pertaining to the Redevelopment Property. If the HRA shall refuse to provide such certification
in accordance with the provisions of this section 4.4, the HRA shall promptly notify Redeveloper
of the same within 20 days following receipt of request therefor from Redeveloper and shall
provide the Redeveloper with a written statement, indicating in adequate detail in what respects
the Redeveloper has failed to complete the relevant portion of the Minimum Improvements in
accordance with the provisions of the Agreement, or is otherwise in default of a material term of
this Agreement, and what measures or acts will be necessary, in the opinion of HRA, for the
Redeveloper to take or perform in order to obtain such certification. If the HRA fails to issue
such a written statement within such 20-day period, the HRA shall be deemed to have waived its
right to do so and shall immediately thereafter issue the Certificate of Completion to the
Redeveloper. The Redeveloper shall have 60 days following receipt of the HRA’s written
response to cure or agree to terms with HRA regarding issues to be resolved prior to the
Redeveloper obtaining a Certification of Completion from HRA.
Section 4.5. Housing Affordability Covenants. The Redeveloper agrees that at all times
from initial occupancy of each of Phase IA – Building A, Phase IIA – Building B, and Phase IC
– Building D through the date that is 30 years from issuance of a final Certificate of Occupancy
for that Phase, the units within the applicable Phase of the Minimum Improvements shall be
reserved for occupancy by individuals and satisfy the income requirements noted in Sections
4.5(a) and (b) below. The Redeveloper and the HRA shall execute a Declaration of Restrictive
Covenants for each of Phases IA - Building A, IIA - Building B, and IC - Building D in
substantially the form set forth in Exhibit F and record such agreement against each of those
Phases. The covenants applicable to each of those Phases shall be as follows:
(a) Affordability Covenants Phase IIA – Building B: Redeveloper covenants to make
at least 10% of the Phase IIA – Building B units constructed to be “affordable” and agrees that
they are subject to the following affordability covenants:
(i) Twelve (12) cooperative Housing Units (the “Affordable Housing Units”) must be
initially sold (as a membership interest in the cooperative) to owner-occupants
with household income not to exceed 60 percent of the Minneapolis-St. Paul
metropolitan statistical area (the “Metro Area”) median income for the calendar
year in which the Redeveloper receives a Certificate of Occupancy (for 2021 this
income is $62,940). The Affordable Housing Units will be equally distributed
throughout the building and floors. Each owner-occupant of the Affordable
Housing Units will be required to pay their pro rata share of ongoing operating
expenses of the cooperative. Future transfers of the Affordable Housing Units (or
the membership interests in the cooperative representing the Affordable Housing
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Units) will be restricted to maintain the ability of future buyers to purchase the
Affordable Housing Units at affordable prices for thirty (30) years following the
first purchase of each of the Affordable Housing Units pursuant to the Affordable
Housing Agreement described below.
(ii) Upon or before closing on the initial sale of each Affordable Housing Unit to any
person, the Redeveloper shall deliver or cause to be delivered written evidence
satisfactory to the HRA of compliance with the covenants. Such evidence shall
include, at a minimum, a fully executed purchase agreement and certificate of real
estate value, certification by the buyer that he or she intends to occupy the
Affordable Housing Unit, and evidence of the buyer’s household income determined
in accordance with Metropolitan Council’s affordability limits for ownership;
provided that income shall be determined as of the date of application for acquisition
financing.
(iii) The HRA and its representatives shall have the right at all reasonable times while the
covenants are in effect, after reasonable notice, to inspect, examine and copy all
books and records of the Redeveloper and its successors and assigns relating to the
covenants.
(iv) The Redeveloper shall execute with the HRA an agreement in recordable form and
satisfactory to the HRA, that substantially reflects the covenants (the “Affordable
Housing Agreement”) before the Redeveloper obtains its financing. The Affordable
Housing Agreement shall include reasonable reporting and monitoring requirements
as necessary to ensure compliance with the covenants therein, and shall be recorded
by the Redeveloper, at its cost, against the appropriate portion of the Redevelopment
Property on which the subject Affordable Housing Units are to be constructed.
Failure to enter into, record or comply with the Affordable Housing Agreement in
accordance with this Section shall be an Event of Default. If the Redeveloper fails
to comply with this Article or with the covenants of the Affordable Housing
Agreement, the Redeveloper will reimburse the HRA for any reasonable attorney
fees incurred by the HRA in an effort to gain the Redeveloper’s compliance with this
Article or with the covenants of the Affordable Housing Agreement.
b. Affordability Covenants Phase IA – Building A and IC – Building D: Redeveloper
agrees that the Minimum Improvements are subject to the following affordability covenants:
(i) The Redeveloper expects that each of Phase IA – Building A and Phase IC –
Building D will include the mix of rental housing units as noted in the table above
in the definition of “Minimum Improvements”. These units constitute
approximately 27% of the overall rental units. In addition, the Redeveloper will
apply to the applicable agencies for project-based housing choice vouchers for
Phase IA – Building A. The Redeveloper will be required to enter into a
Declaration of Restrictive Covenants for each Phase that will cause the affordable
restrictions to remain in effect for a thirty (30) year period. On the date of receipt
of a final Certificate of Occupancy for each of those Phases, the Redeveloper will
deliver an executed Declaration that Phase to the HRA in recordable form.
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(ii) The Redeveloper agrees to distribute the affordable rental Housing Units among
the different rental Housing Unit types throughout the building and floors and
various unit types.
(iii) During the term of the Declaration, the Redeveloper shall not adopt any policies
specifically prohibiting or excluding rental to tenants holding
certificates/vouchers under Section 8 of the United States Housing Act of 1937, as
amended, codified as 42 U.S.C. Sections 1401 et seq., or its successor because of
such prospective tenant’s status as such a certificate/voucher holder.
(iv) The Redeveloper will promptly notify the HRA if at any time during the term of
the Declaration the number of rental Housing Units in Phase IA, Building A or
Phase IC, Building D occupied by Qualifying Tenants (as defined in the
Declaration) or held vacant and available for occupancy by Qualifying Tenants
pursuant to the Declaration is fewer than the number required by the terms of the
Declaration.
(v) The HRA and its representatives will have the right at all reasonable times during
normal business hours while the covenants in this Section are in effect, after
reasonable notice to inspect, to examine and copy all books and records of the
Redeveloper and its successors and assigns relating to the covenants described in
this Section and in the Declaration for each of the two relevant Phases.
(vi) The Redeveloper must submit evidence of tenant incomes, showing that Phase IA
– Building A and Phase IC – Building D meet the income requirements set forth
in the Declarations for those Phases by April 1st of each year. The HRA will
review the submitted evidence related to the income restrictions and to the extent
the threshold for one of those Phases is not met, the HRA will withhold the TIF
payment for that time period with respect to that Phase.
c. Affordability Applications. The HRA and the City agree to pledge support for
any affordability application made by the Redeveloper; however, such pledge of support shall
not include any monetary commitment.
Section 4.6. Affordable Housing Reporting: At least annually, no later than April 1 of
each year commencing on the April 1 first following the issuance of the Certificate of
Completion for Phase IA – Building A or Phase IC – Building D, the Redeveloper shall provide
a report to the HRA evidencing that the Redeveloper complied with the income affordability
covenants set forth in Section 4.5 hereof during the previous calendar year with respect to each
Phase that the Redeveloper has Substantially Completed. The income affordability reporting
shall be on the form entitled “Tenant Income Certification” from the Minnesota Housing Finance
Agency (MHFA HTC Form 14), or if unavailable, any similar form. The HRA may require the
Redeveloper to provide additional information reasonably nec essary to assess the accuracy of
such certification. Unless earlier excused by the HRA, the Redeveloper shall send affordable
housing reports to the HRA until the TIF District is decertified. If the Redeveloper fails to
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provide the annual reporting required under this Section for any Phase, the HRA may withhold
payments of Available Tax Increment under the Note for that Phase.
Section 4.7. City Public Improvements: The Redeveloper shall construct the City
Public Improvements by June 30, 2025, in accordance with plans and specifications approved by
the City. The City may inspect the City Public Improvements as the improvements are being
constructed and the Redeveloper will dedicate the City Public Improvements to the City upon
completion. Acceptance of all City Public Improvements shall be by City staff, in their sole
discretion, and consistent with the PUD Agreement as hereinafter defined.
Section 4.8. Homeowners’ Associations and Restrictive Covenants: The HRA
acknowledges that the Redeveloper may utilize deed restrictions, covenants, agreements,
architectural controls, homeowners’ associations (HOAs) and other means to control the use and
to ensure the maintenance of the land within the Minimum Improvements. No such instruments
shall adversely affect the rights of the City or HRA under this Agreement, without their consent,
which consent shall not be unreasonably withheld. The Redeveloper shall submit any such
instruments to the City and HRA for their review and comment.
For Phase IIB (for sale town homes) the HOA documents should have a stipulation on the
number of rental units allowed. The stipulation is at the discretion of the HOA and applicable
laws governing HOA’s and shall be submitted to the HRA for their review and comment.
Section 4.9. Maintenance: The Redeveloper and the HRA agree that the Redeveloper or
HOA shall be responsible for all maintenance (including snow and ice removal) and repair costs
associated with the private improvements on that Phase including:
• Driveways, service drives, and surface parking stalls.
• Parking structure
• Sidewalks
• Streetlights
• Landscaping
• Streetscape improvements
• Storm water ponding
• Bicycle Parking
• Plazas
• Pavilion
• Cascade promenade
• Greenway commons
Redeveloper and the HOAs shall not be responsible for the maintenance and repair of the
Spine Road.
Section 4.10. Reciprocal Easement and Operating Agreement: The Redeveloper and
City will enter into a mutually acceptable reciprocal easement and operating agreement (the
“REOA”) or other easement agreements to include, without limitation, the following key terms:
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(a) Redeveloper and/or City responsibility for maintenance and operation of the
private applicable Phase of the Minimum Improvements, road network, and other City Public
Improvements, with such costs being allocated to and among Redeveloper, the City and/or any
other owners of each Phase of the Minimum Improvements;
(b) perpetual public access easements and perpetual drainage and utility easements, in
each case, over the applicable City Public Improvements and at no cost to the City;
(c) perpetual license or public access easements for greenway commons, pavilion
plazas, and cascade promenade or other private areas that provide public benefit that the City and
Redeveloper deem appropriate; and
(d) provisions providing for enforcement of all terms and conditions of the REOA.
ARTICLE V
Insurance
Section 5.1. Insurance.
(a) The Redeveloper will provide and maintain or cause to be provided and
maintained at all times during the process of constructing the Minimum Improvements an All
Risk Broad Form Basis Insurance Policy and, from time to time during that period, at the request
of the HRA, furnish the HRA with proof of payment of premiums on policies covering the
following:
(i) Builder’s risk insurance, written on the so-called “Builder’s Risk –
Completed Value Basis,” in an amount equal to one hundred percent (100%) of the
insurable value of the Minimum Improvements at the date of completion, and with
coverage available in nonreporting form on the so-called “all risk” form of policy. The
interest of the HRA must be protected in accordance with a clause in form and content
satisfactory to the HRA;
(ii) Commercial general liability insurance (including operations, contingent
liability, operations of subcontractors, completed operations and contractual liability
insurance) together with a Protective Liability Policy with limits against bodily injury and
property damage of not less than $2,000,000 for each occurrence (to accomplish the
above-required limits, an umbrella excess liability policy may be used). The HRA must
be listed as an additional insured on the policy; and
(iii) Workers’ compensation insurance, with statutory coverage.
(b) As to each Phase, upon completion of construction of the Minimum
Improvements in that Phase and prior to the Maturity Date of the Note for that Phase, the
Redeveloper must maintain, or cause to be maintained, at its cost and expense, and from time to
time at the request of the HRA will furnish proof of the payment of premiums on, insurance as
follows:
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(i) Insurance against loss and/or damage to the Minimum Improvements on
that Phase under a policy or policies covering the risks as are ordinarily insured against
by similar businesses.
(ii) Commercial general public liability insurance, including personal injury
liability (with employee exclusion deleted), against liability for injuries to persons and/or
property, in the minimum amount for each occurrence and for each year of $2,000,000,
and must be endorsed to show the HRA as an additional insured.
(iii) Other insurance, including workers’ compensation insurance respecting all
employees, if any, of the Redeveloper, in an amount as is customarily carried by like
organizations engaged in like activities of comparable size and liability exposure;
provided that the Redeveloper may be self-insured with respect to all or any part of its
liability for workers’ compensation.
(c) All insurance required in this Article V must be taken out and maintained in
responsible insurance companies selected by the Redeveloper which are authorized under the
laws of the State to assume the risks covered thereby. Upon request, the Redeveloper will
deposit annually with the HRA policies evidencing all the insurance, or a certificate or
certificates or binders of the respective insurers stating that the insurance is in force and effect.
Unless otherwise provided in this Article V each policy must contain a provision that the insurer
will not cancel nor modify it in such a way as to reduce the coverage provided below the
amounts required herein without giving written notice to the Redeveloper and the HRA at least
sixty (60) days before the cancellation or modification becomes effective. In lieu of separate
policies, the Redeveloper may maintain a single policy, blanket or umbrella policies, or a
combination thereof, having the coverage required herein, in which event the Redeveloper will
deposit with the HRA a certificate or certificates of the respective insurers as to the amount of
coverage in force upon the Minimum Improvements.
(d) The Redeveloper agrees to notify the HRA immediately in the case of damage
exceeding $500,000 in amount to, or destruction of, the Minimum Improvements or any portion
thereof resulting from fire or other casualty. In the event this type of damage or destruction
occurs, the Redeveloper will forthwith repair, reconstruct and restore the Minimum
Improvements to substantially the same or an improved condition or value as it existed prior to
the event causing the damage and, to the extent necessary to accomplish the repair,
reconstruction and restoration, the Redeveloper will apply the Net Proceeds of any insurance
relating to the damage received by the Redeveloper to the payment or reimbursement of the costs
thereof.
The Redeveloper will complete the repair, reconstruction and restoration of the Minimum
Improvements, whether or not the Net Proceeds of insurance received by the Redeveloper is
sufficient to pay for the same. Any Net Proceeds remaining after completion of the repairs,
construction and restoration will be the property of the Redeveloper.
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(e) Notwithstanding anything to the contrary contained in this Agreement, in the
event of damage to the Minimum Improvements in excess of $100,000 and the Redeveloper
fails, subject to Unavoidable Delays, to complete any repair, reconstruction or restoration of the
Minimum Improvements within eighteen (18) months from the date of damage or such later time
as reasonably determined by the HRA if the Redeveloper commences restoration within such
eighteen (18) month period and diligently prosecutes the same to completion, the HRA may, at
its option, terminate the Note or Notes for the damaged Phase or Phases as provided in
Section 9.3(b) hereof. If the HRA terminates the Note for a Phase, the termination will
constitute the HRA’s sole remedy under this Agreement as a result of the Redeveloper’s failure
to repair, reconstruct or restore the Minimum Improvements in that Phase. Thereafter, the HRA
will have no further obligations to make any payments under the Note for that Phase.
(f) The Redeveloper and the HRA agree that all of the insurance provisions set forth
in this Article V will terminate upon the termination of this Agreement.
Section 5.2. Subordination. The HRA and the City hereby subordinate all rights of their
rights to receive or apply any insurance proceeds to the rights of any Holder of a Mortgage
allowed under Article VII of this Agreement.
ARTICLE VI
Taxes; Use of Tax Increment
Section 6.1. Right to Collect Delinquent Taxes. The Redeveloper acknowledges that the
HRA is providing substantial aid and assistance in furtherance of the redevelopment through
issuance of the Notes. The Redeveloper understands that the Tax Increments pledged to
payment of the Notes are derived from real estate taxes on the Redevelopment Property, which
taxes must be promptly and timely paid. To that end, the Redeveloper agrees for itself, its
successors and assigns, in addition to the obligation pursuant to statute to pay real estate taxes,
that it is also obligated by reason of this Agreement to pay before delinquency all real estate
taxes assessed against the Redevelopment Property and the Minimum Improvements. The
Redeveloper acknowledges that this obligation creates a contractual right on behalf of the HRA
to sue the Redeveloper or its successors and assigns to collect delinquent real estate taxes and
any penalty or interest thereon and to pay over the same as a tax payment to the county auditor.
In any such suit, the HRA shall also be entitled to recover its costs, expenses and reasonable
attorney fees.
Section 6.2. Use of Tax Increment. Except as provided for in this Agreement, the
HRA shall be free to use any Tax Increment it receives from the County with respect to TIF
District No. 1-6: 325 at Blake for any purpose for which such increment may lawfully be used
under the TIF Act and the HRA shall have no obligations to the Redeveloper with respect to the
use of such Tax Increment.
Section 6.3. Reduction of Taxes. The Redeveloper agrees that after the date of certification
of the Tax Increment District and prior to completion of the Minimum Improvements on each
Phase, it will not cause a reduction in the real property taxes paid in respect of that Phase through:
(A) willful destruction of the Minimum Improvements on that Phase or any part thereof (except for
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the demolition of structures required for construction of the Minimum Improvements); or (B)
willful refusal to reconstruct damaged or destroyed property pursuant to Section 5.1 hereof.
The Redeveloper also agrees that, with respect to each Phase, it will not, prior to the
Maturity Date of the Note for that Phase: (i) seek exemption from property tax for that Phase; (ii)
convey or transfer or allow conveyance or transfer of that Phase to any entity that is exempt from
payment of real property taxes under State law; or (iii) seek or agree to any reduction of the
assessor’s estimated market value to below the Minimum Market Value for that Phase. If
Redeveloper brings a petition challenging a Market Value determination exceeding the minimum
value established in a Minimum Assessment Agreement, the Redeveloper must inform the HRA
of such petition. The HRA will pay principal and interest on the each Note only to the extent of
Available Tax Increment attributable to the minimum value of the relevant Phase until final
resolution of such petition. Upon resolution of Redeveloper’s tax petition, any Available Tax
Increment deferred and withheld will be paid, without interest thereon, to the extent payable
under the assessor’s final determination of Market Value.
Notwithstanding the foregoing, the HRA acknowledges that the Redeveloper intends to
apply for 4d tax classification for 100% of Phase IA – Building A and 20% of the units on
Phase IC-Building D, as defined in Minnesota Statute 273.13, Subd. 25(e), for purposes of the
property taxes imposed against the Minimum Improvements.
The Redeveloper may, as to each Phase, at any time following the issuance of the Certificate
of Completion for that Phase, seek through petition or other means to have the Assessor’s Estimated
Market Value for that Phase reduced to not less than the Minimum Market Value for that Phase.
Such activity must be preceded by written notice from the Redeveloper to the HRA indicating its
intention to do so.
Upon receiving such notice, or otherwise learning of the Redeveloper’s intentions, the HRA
may suspend or reduce payments due under the Note with respect to the relevant Phase except for
the portion of such payments from Available Tax Increment, as defined in the Note for that Phase,
based on the Minimum Market Value as described in the Minimum Assessment Agreement for that
Phase, until the actual amount of the reduction in market value is determined, whereupon the HRA
will make the suspended payments less any amount that the HRA is required to repay the County as
a result any retroactive reduction in market value of that Phase. If the Redeveloper fails to notify
the HRA of the tax petition, the HRA shall have the right to withhold all payments of principal and
interest on the Note with respect to the relevant Phase until the Redeveloper’s challenge is resolved.
Upon resolution of the Redeveloper’s tax petition, any Available Tax Increment deferred and
withheld under this Section shall be paid, without interest thereon, to the extent payable under the
assessor’s final determination of market value.
During the period that the payments are subject to suspension, the HRA may make partial
payments on the Note, from the amounts subject to suspension, 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.
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The HRA’s suspension of payments on a Note pursuant to this Section shall not be
considered a default under Article IX hereof.
Section 6.4. Qualifications. The Redeveloper understands and acknowledges that all
Public Redevelopment Costs must first be paid by or on behalf of the Redeveloper and will be
reimbursed from Available Tax Increment pursuant to the terms of the Notes. The HRA makes
no representations or warranties regarding the amount of Tax Increment, or that revenues
pledged to the Notes will be sufficient to pay the principal of the Notes. Any estimates of Tax
Increment prepared by the HRA or its financial advisors in connection with the TIF District or
this Agreement are for the benefit of the HRA, and are not intended as representations on which
the Redeveloper may rely. In the event of legislative changes reducing the tax rate classification
of certain qualified low-income rental housing under Minnesota Statutes, Section 273.13,
subd. 25(e), the Redeveloper expressly agrees and acknowledges that the HRA may adjust the
principal amount of the Notes to reflect such reduction. The parties agree that they will work in
good faith to determine the appropriate amount of such reduction, it being the intent that the
aggregate effect of such changes (i.e., the projected expense savings to the Redeveloper
attributable to the reduction to the annual tax liability with regard to the Project and the projected
income reduction to the Redeveloper attributable to the reduction in the amount of payments
under the Notes) will be revenue-neutral to the Redeveloper. If the principal amount of the
Notes is reduced pursuant to this Section 6.4, and there is subsequently a legislative change
which increases the tax rate classification (i.e., the legislation giving rise to the reduction is
repealed), the HRA shall adjust the principal amount of the Notes to reflect such increased tax
burden in the same manner as the reduction aforesaid; provided, however, that any such increase
be limited to the aggregate amount by which the principal balance of the Notes was previously
reduced pursuant to this Section 6.4. Public Redevelopment Costs exceeding the principal
amount of the Notes are the sole responsibility of Redeveloper.
Section 6.5. Transfer Obligations. Notwithstanding anything herein to the contrary, the
parties acknowledge and agree that upon Transfer of any Phase to another person or entity, the
Redeveloper will remain obligated under this Article VI hereof, unless the Redeveloper is released
from such obligations with respect to that Phase in accordance with the terms and conditions of
Section 8.2(b) or 8.3 hereof.
Section 6.6. Minimum Assessment Agreement.
(a) On or about the date of completion of each Phase, the Redeveloper shall execute a
Minimum Assessment Agreement for the Phase pursuant to Section 469.177, subdivision 8 of the
TIF Act, specifying an assessor’s minimum market value for that Phase with the Minimum
Improvements constructed thereon.
Redeveloper and HRA will enter into a Minimum Market Value Assessment Agreement
(MAA) setting a minimum property tax value for the rental portions of the various Phases as
noted below:
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Phase Amount Date
Phase IB – Building C $105,030,000 January 2, 2025 for payable 2026
Phase IC – Building D $44,880,000 January 2, 2025 for payable 2026
Phase IA – Building A $26,680,000 January 2, 2025 for payable 2026
The Redeveloper and the HRA agree that the dates for the applicable Phase MAA may be
revised based upon timing of actual construction schedules and that the final MAA amounts may
be revised based upon current market valuations provided by the County Assessor. Revisions to
the dates of the applicable Phase MAA and execution thereof shall not require approval or
further action by the HRA and can be completed administratively by staff and legal counsel, so
long as such revision is no more than 18 months from the applicable Phase MAA as noted in the
above schedule. Any revisions to the dates beyond 18 months for the applicable Phase MAA
shall require renegotiation between the parties. Revisions to the MAA amounts shall not require
approval or further action by the HRA and can be completed administratively by staff and legal
counsel.
The Minimum Assessment Agreement for each Phase shall terminate as to that Phase on
the Termination Date for that Phase.
(b) The Minimum Assessment Agreements shall be substantially in the form attached
hereto as Exhibit G. Nothing in a Minimum Assessment Agreement shall limit the discretion of the
assessor to assign a market value to the property in excess of such assessor’s minimum market value
nor prohibit the Redeveloper from seeking through the exercise of legal or administrative remedies
a reduction in such market value for property tax purposes, provided however, that the Redeveloper
shall not seek a reduction of such market value below the assessor’s minimum market value in any
year so long as such Minimum Assessment Agreement shall remain in effect. The Minimum
Assessment Agreements shall remain in effect for the period described in Exhibit G.
ARTICLE VII
Financing
Section 7.1. Mortgage Financing.
(a) Before commencement of construction of the Minimum Improvements, the
Redeveloper must submit to the HRA or provide access thereto for review by HRA staff,
consultants and agents, evidence reasonably satisfactory to the HRA that Redeveloper has
available funds, or commitments to obtain funds, whether in the nature of mortgage financing,
equity, grants, loans or other sources sufficient for payment of the Minimum Improvements,
provided that any lender or grantor commitments shall be subject only to such conditions as are
normal and customary in the commercial lending industry. The commitments may be submitted
as short term financing, long term mortgage financing, a bridge loan with a long term take-out
financing commitment, or any combination of the foregoing.
(b) If the HRA finds that the financing is sufficiently committed and adequate in
amount to pay the costs specified in paragraph (a) then the HRA will notify the Redeveloper in
writing of its approval. Such approval will not be unreasonably withheld and either approval or
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rejection will be given within twenty (20) days from the date when the HRA is provided the
evidence of financing. A failure by the HRA to respond to the evidence of financing will be
deemed to constitute an approval hereunder. If the HRA rejects the evidence of financing as
inadequate, it will do so in writing specifying the basis for the rejection. In any event the
Redeveloper will submit adequate evidence of financing within ten (10) days after any rejection.
Section 7.2. HRA’s Option to Cure Default under a Mortgage. In the event that there
occurs a default under any Mortgage authorized pursuant to Section 7.1 of this Agreement, to the
extent the Redeveloper is aware of such default, the Redeveloper shall cause the HRA to receive
copies of any notice of default received by the Redeveloper from the holder of such Mortgage.
Thereafter, to the extent permitted by the Holder of any Mortgage, the HRA shall have the right,
but not the obligation, to cure any such default on behalf of the Redeveloper within such cure
periods as are available to the Redeveloper under the Mortgage documents. In the event there is
an event of default under this Agreement, the HRA will transmit to the Holder of any Mortgage a
copy o f any notice of default given by the HRA pursuant to Article IX hereof.
Section 7.3. Modification; Subordination. In order to facilitate the securing of other
financing, the HRA agrees to subordinate its rights under this Agreement provided that such
subordination shall be subject to such reasonable terms and conditions as the HRA and Holder
mutually agree in writing. Notwithstanding anything to the contrary herein, any subordination
agreement must include the provision described in Section 7.2 hereof.
ARTICLE VIII
Prohibitions Against Assignment and Transfer; Indemnification
Section 8.1. Representation as to Redevelopment. The Redeveloper represents and
agrees that its purchase of the Redevelopment Property, and its other undertakings pursuant to
the Agreement, are, and will be used, for the purpose of development of the Redevelopment
Property and not for speculation in land holding.
Section 8.2. Prohibition Against Redeveloper’s Transfer of Property and Assignment of
Agreement. The Redeveloper represents and agrees that, as to each Phase, until either the
issuance of the Certificate of Completion for the Minimum Improvements in that Phase or the
Termination Date for that Phase, as applicable:
(a) Except as specifically described in this Agreement, the Redeveloper has not made
or created and will not make or create or suffer to be made or created any total or partial sale,
assignment, conveyance, or lease, or any trust or power, or transfer in any other mode or form of
or with respect to this Agreement or the Redevelopment Property or any part thereof or any
interest therein, or any contract or agreement to do any of the same, to any person or entity
(collectively, a “Transfer”), without the prior written approval of the HRA’s board of
commissioners. The term “Transfer” does not include, with respect to each of Redeveloper’s
permitted transferee and/or assignee of Redeveloper: (i) a mortgage made or granted by way of
security for, and only for, the purpose of obtaining construction, interim or permanent financing
necessary to enable the Redeveloper or any successor in interest to any Phase or to construct the
Minimum Improvements or component thereof; (ii) any lease, license, easement or similar
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arrangement entered into in the ordinary course of business related to operation of the Minimum
Improvements; (iii) acquisition of a controlling interest in Redeveloper or its successor and/or
assignee by another entity or merger of Redeveloper or its successor and/or assignee with
another entity; (iv) any sale, conveyance, or transfer in any form to any affiliate of Redeveloper
or its successor and/or assignee; (v) a transfer to a third party if the Redeveloper or its successor
and/or assignee is unable to commence construction by the date provided in Section 4.3 hereof
and the HRA terminates this Agreement pursuant to Section 9.2(b) hereof; or (vi) transfers of
membership interests or other ownership interests in the Redeveloper or its successor and/or
assignee, pursuant to the Redeveloper’s operating agreement or partnership agreement. The
HRA acknowledges that the Redeveloper or its successor and/or assignee may assign or sell the
Note for a Phase to a Lender or another party. For all assignments of a TIF Note, the HRA shall
require an Investment Letter from the assignee in the form set forth in EXHIBIT H.
(b) If the Redeveloper seeks to effect a Transfer of any Phase or other part of the
Redevelopment Property requiring the approval of the HRA after the issuance of the Certificate
of Completion for that Phase, the HRA shall be entitled to require as conditions to such Transfer
that:
(1) any proposed transferee shall have the qualifications and financial
responsibility, in the reasonable judgment of the HRA, necessary and adequate to fulfill
the obligations undertaken in this Agreement by the Redeveloper as to the portion of the
Redevelopment Property to be transferred; and
(2) Any proposed transferee, by instrument in writing satisfactory to the HRA
and in form recordable in the public land records of the County, shall, for itself and its
successors and assigns, and expressly for the benefit of the HRA, have expressly assumed
all of the obligations of the Redeveloper under this Agreement as to the portion of the
Redevelopment Property to be transferred and agreed to be subject to all the conditions
and restrictions to which the Redeveloper is subject as to such portion; provided,
however, that the fact that any transferee of, or any other successor in interest whatsoever
to, the Redevelopment Property, or an y part thereof, shall not, for whatever reason, have
assumed such obligations or so agreed, and shall not (unless and only to the extent
otherwise specifically provided in this Agreement or agreed to in writing by the HRA)
deprive the HRA of any rights or remedies or controls with respect to the Redevelopment
Property, the Minimum Improvements or any part thereof or the construction of the
Minimum Improvements; it being the intent of the parties as expressed in this Agreement
that (to the fullest extent permitted at law and in equity and excepting only in the manner
and to the extent specifically provided otherwise in this Agreement) no transfer of, or
change with respect to, ownership in the Redevelopment Property or any part thereof, or
any interest therein, however consummated or occurring, and whether voluntary or
involuntary, shall operate, legally, or practically, to deprive or limit the HRA of or with
respect to any rights or remedies on controls provided in or resulting from this Agreement
with respect to the Redevelopment Property that the HRA would have had, had there
been no such transfer or change. In the absence of specific written agreement by the
HRA to the contrary, no such transfer or approval by the HRA thereof shall be deemed to
relieve the Redeveloper, or any other party bound in any way by this Agreement or
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otherwise with respect to the Redevelopment Property, from any of its obligations with
respect thereto.
(3) Any and all instruments and other legal documents involved in effecting
the transfer of any interest in this Agreement or the Redevelopment Property governed by
this Article VIII, shall be in a form reasonably satisfactory to the HRA.
(c) If the conditions described in paragraph (b) are satisfied then the Transfer will be
approved and the Redeveloper shall be released from its obligation under this Agreement, as to
the portion of the Redevelopment Property that is transferred, assigned, or otherwise conveyed.
The provisions of this paragraph (c) apply to all subsequent transferors, assuming compliance
with the terms of this Article VIII.
Section 8.3. Release and Indemnification Covenants.
(a) The Redeveloper releases from and covenants and agrees that the HRA and its
respective governing body members, officers, agents, servants and employees thereof will not be
liable for and agrees to indemnify and hold harmless the HRA and its respective governing body
members, officers, agents, servants and employees thereof 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 Minimum Improvements.
(b) Except for any willful misrepresentation or any willful or wanton misconduct of
the following named parties, the Redeveloper agrees to protect and defend the HRA and its
respective governing body members, officers, agents, servants and employees (the “Indemnified
Parties”) thereof, now or 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 this Agreement, or the transactions contemplated hereby or
the acquisition, construction, installation, ownership, maintenance and operation of the Minimum
Improvements.
(c) Except for any negligence of the Indemnified Parties (as defined in clause (b)
above), and except for any breach by the Indemnified Parties of their obligations under this
Agreement, the Indemnified Parties shall not be liable for any damage or injury to the persons or
property of the Redeveloper or its officers, agents, servants or employees or any other person
who may be about the Redevelopment Property or Minimum Improvements due to any act of
negligence of any person.
(d) All covenants, stipulations, promises, agreements and obligations of the HRA
contained herein will be deemed to be the covenants, stipulations, promises, agreements and
obligations of the HRA and not of any governing body member, officer, agent, servant or employee
of the HRA in the individual capacity thereof.
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ARTICLE IX
Events of Default
Section 9.1. Events of Default Defined. “Event of Default” means any one or more of
the following events, after the non-defaulting party provides sixty (60) days’ written notice to the
defaulting party of the event, but only if the event has not been cured within said sixty (60) days
after written notice of default has been tendered or, if the event is incurable within sixty (60)
days, the defaulting party does not, within the sixty (60) day period, provide assurances
reasonably satisfactory to the non-defaulting party that the event will be cured as soon as
reasonably possible:
(a) Failure by the Redeveloper to acquire the Redevelopment Property in accordance
with Article III of this Agreement, unless the failure is caused by an Unavoidable Delay;
(b) Failure by the Redeveloper to seek approvals from the City and other entities
necessary in order to construct the Minimum Improvements, unless the failure is caused by an
Unavoidable Delay;
(c) Failure by the Redeveloper to commence and complete construction of the
Minimum Improvements pursuant to the terms, conditions and limitations of Article IV of this
Agreement, including the timing thereof, unless such failure is caused by an Unavoidable Delay
or waived by the Redeveloper and HRA;
(d) Failure by the Redeveloper to provide and maintain any insurance required to be
provided and maintained by Article V;
(e) If the Redeveloper shall file a petition in bankruptcy, or shall make an assignment
for the benefit of its creditors or shall consent to the appointment of a receiver;
(f) Failure by the Redeveloper to reimburse the HRA for its administrative expenses
associated with the processing of Redeveloper’s requests, or to make the necessary escrow
deposits pursuant to Section 3.4;
(g) Sale of the Redevelopment Property or the Minimum Improvements, or any
portion thereof, by the Redeveloper in violation of Article VIII of this Agreement; or
(h) Failure by either party to observe or perform any material covenant, condition,
obligation or agreement on its part to be observed or performed under this Agreement.
Section 9.2. Remedies of Default. Whenever any Event of Default referred to in
Section 9.1 hereof occurs, the non-defaulting party may exercise its rights under this Section 9.2
only if the Event of Default has not been cured within sixty (60) days of the non-defaulting
party’s tender of a notice of default or, if the Event of Default is incurable within sixty (60) days,
the defaulting party does not provide assurances reasonably satisfactory to the non-defaulting
party that the Event of Default will be cured as soon as reasonably possible:
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(a) Suspend its performance under the Agreement until it receives assurances that the
defaulting party will cure its default and continue its performance under the Agreement.
(b) Cancel and rescind or terminate the Agreement.
(c) Upon a default by the Redeveloper, the HRA may suspend payments under the
Notes or terminate the Notes and the TIF District, subject to the provisions of Section 9.3 hereof.
(d) Upon failure by Redeveloper to timely commence or complete construction of the
Minimum Improvements in accordance with Section 4.3 hereof, subject to the notice and cure
periods set forth herein, the HRA may terminate this Agreement; provided, however, that
notwithstanding anything herein to the contrary, the HRA acknowledges and agrees that it shall
have no remedy of specific performance with regard to the Redeveloper’s obligation to
commence the construction of the Minimum Improvements.
(e) Take whatever action, including legal, equitable or administrative action, which
may appear necessary or desirable to collect any payments due under this Agreement, or to
enforce performance and observance of any obligation, agreement, or covenant under this
Agreement.
Raymond James Tax Credit Fund XX L.L.C., a Florida limited liability company, its
successors and/or assigns and any other investors (collectively, the “Investor Limited Partner”),
the limited partner or non-managing member of the Redeveloper’s respective affiliate that owns
or will own title to the respective Phases of the Development Property shall have the right, but
not the obligation, to cure any default of the Redeveloper hereunder and such cure shall be
deemed to have been made by the Redeveloper.
The Lender with respect to each Phase shall have the right, but not the obligation, to cure
any default of the Redeveloper hereunder and such cure shall be deemed to have been made by
the Redeveloper.
Section 9.3. Termination or Suspension of Notes. After the HRA has issued its
Certificate of Completion for each Phase of the Minimum Improvements, the HRA may exercise
its rights under Section 9.2(c) hereof with respect to that Phase only for the following Events of
Default:
(a) the Redeveloper fails to pay real estate taxes or assessments on that Phase of the
Redevelopment Property or any part thereof when due, and the taxes or assessments have not
been paid, or provision satisfactory to the HRA made for their payment, within sixty (60) days
after written demand by the HRA to do so; or
(b) the Redeveloper fails to comply with the Redeveloper’s obligations to operate and
maintain, preserve and keep that Phase of the Minimum Improvements or cause the
improvements to be maintained, preserved and kept with the appurtenances and every part and
parcel thereof, in good repair and condition, pursuant to Sections 4.1 and 5.1(e) hereof; provided
that, upon failure to comply with the obligations under Section 4.1 or 5.1(e) hereof, if uncured
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after sixty (60) days’ written notice to the Redeveloper of the failure, the HRA may only suspend
payments under the Note for that Phase until the Redeveloper complies with said obligations. If
the Redeveloper fails to comply with said obligations for a period of eighteen months, the HRA
may terminate the Note with respect to that Phase; or
(c) the Redeveloper fails to comply with the affordability covenants provided in
Section 4.5 hereof with respect to that Phase.
Section 9.4. No Remedy Exclusive. No remedy herein conferred upon or reserved to the
HRA, the Redeveloper is intended to be exclusive of any other available remedy or remedies, but
each and every remedy will be cumulative and will 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 will impair any right or power
or will be construed to be a waiver thereof, but any right and power may be exercised from time
to time and as often as may be deemed expedient. In order to entitle the HRA to exercise any
remedy reserved to it, it will not be necessary to give notice, other than the notices already
required in Sections 9.2 and 9.3 hereof.
Section 9.5. No Additional Waiver Implied by One Waiver. In the event any agreement
contained in this Agreement should be breached by either party and thereafter waived by the
other party, the waiver will be limited to the particular breach so waived and will not be deemed
to waive any other concurrent, previous or subsequent breach hereunder.
Section 9.6. Attorney Fees. Whenever any Event of Default occurs (as determined by a
final court or administrative order or Redeveloper admissions) and if the HRA shall employ
attorneys or incur other expenses for the collection of payments due or to become due or for the
enforcement of performance or observance of any obligation or agreement on the part of the
Redeveloper under this Agreement, the Redeveloper agrees that it shall, within ten (10) days of
written demand by the HRA, pay to the HRA the reasonable fees of such attorneys and such
other reasonable expenses so incurred by the HRA.
Section 9.7. No Cross-Default. Notwithstanding anything to the contrary set forth in this
Agreement, no Event of Default by the Redeveloper, its permitted transferees, and/or assignees
for one Phase (a “Phase Redeveloper”) shall constitute an Event of Default by a Phase
Redeveloper for any other Phase. No Phase Redeveloper shall be responsible for the actions or
obligations of any other Phase Redeveloper. None of the obligations under this Agreement are
joint and several obligations of the Phase Redevelopers, and the City or the HRA may not seek
any remedies against a Phase Redeveloper whose actions did not give rise to an Event of Default.
An Event of Default by a Phase Redeveloper shall not limit, impair, or revoke the rights of any
other Phase Redeveloper under this Agreement or the respective Note issued or to be issued to
such non-defaulting Phase Redeveloper.
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ARTICLE X
Additional Provisions
Section 10.1. Conflict of Interests; Representatives Not Individually Liable. To the best
of Redeveloper’s knowledge, no member, official, or employee of the HRA shall have any
personal financial interest, direct or indirect, in this Agreement, nor shall any such member,
official, or employee participate in any decision relating to the Agreement which affects his or
her personal financial 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
HRA shall be personally liable to the Redeveloper, or any successor in interest, in the event of
any default or breach or for any amount which may become due or on any obligations under the
terms of this Agreement.
Section 10.2. Equal Employment Opportunity. The Redeveloper, for itself and its
successors and assigns, agrees that during the construction of the Minimum Improvements
provided for in this Agreement, it will comply with all applicable equal employment and
nondiscrimination laws and regulations.
Section 10.3. Restrictions on Use. The Redeveloper agrees that through the Termination
Date for each Phase it will use the Minimum Improvements in that Phase for only such uses as
permitted under the City’s land use regulations. Further, the Redeveloper agrees that, prior to the
Maturity Date with respect to each Phase, the Redeveloper, and such successors and assigns, shall
use that Phase solely for the development of multifamily housing in accordance with the terms of this
Agreement, and shall not discriminate upon the basis of race, color, creed, sex or national origin in
the sale, lease, or rental or in the use or occupancy of the Redevelopment Property or any
improvements erected or to be erected thereon, or an y part thereof.
Section 10.4. Notices and Demands. Except as otherwise expressly provided in this
Agreement, any notice, demand, or other communication under the Agreement or any related
document by either party to the other shall be sufficiently given or delivered if it is dispatched by
registered or certified United States mail, postage prepaid, return receipt requested, or delivered
personally to:
(a) in the case of the Redeveloper:
Alatus Hopkins MD LLC
IDS Center
80 South 8th Street, Suite 4155
Minneapolis, MN 55402
Attn: Robert Lux
and with copies to:
Winthrop & Weinstine, P.A.
225 South Sixth Street, Suite 3500
Minneapolis, MN 55402
Attn: John M. Stern
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(b) in the case of the City:
City of Hopkins, Minnesota
1010 1st Street South
Hopkins, MN 55343
Attn: City Manager
with a copy to:
Kennedy & Graven, Chartered
150 South 5th Street, Suite 700
Minneapolis, MN 55402
Attn: Scott J. Riggs
(c) in the case of the HRA:
(d) in the case of the Investor Member
of Borrower:
(e) With a copy to:
Housing and Redevelopment Authority in
and for the City of Hopkins
1010 1st Street South
Hopkins, MN 55343
Attn: Executive Director
Raymond James Tax Credit Fund XX
L.L.C.
c/o Raymond James Affordable Housing
Investments, Inc.
880 Carillon Parkway
St. Petersburg, FL 33716
Attn: Steven J. Kropf, President
Nixon Peabody LLP
Exchange Place
53 State Street
Boston, MA 02109
Attn: Nate Bernard, Esq.
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 10.4.
Section 10.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one and the same instrument.
Section 10.6. Disclaimer of Relationships. The Redeveloper acknowledges that nothing
contained in this Agreement nor any act by the HRA or the Redeveloper shall be deemed or
construed by the Redeveloper or by any third person to create any relationship of third-party
beneficiary, principal and agent, limited or general partner, or joint venture between HRA and
the Redeveloper.
Section 10.7. Amendment. This Agreement may be amended only by the written
agreement of the parties.
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Section 10.8. Recording. The HRA intends to record this Agreement among the land
records of Hennepin County, Minnesota and the Redeveloper agrees to pay for the cost of
recording same.
Section 10.9. Ind emnity. The Redeveloper hereby agrees that the HRA, and its
governing body members, officers, agents, and employees shall not be liable for, and hereby
agrees to indemnify and hold harmless the same, against any loss or claims arising under this
Agreement, except for losses or claims arising out of the acts or omissions of the HRA, and its
governing body members, officers, agents, and employees.
Section 10.10. Titles of Articles and Sections. Any titles of the several parts, articles,
and sections of this Agreement are inserted for convenience of reference only and shall be
disregarded in construing or interpreting any of its provisions.
Section 10.11. Governing Law; Venue. This Agreement shall be construed in
accordance with the laws of Minnesota. Any dispute arising from this Agreement shall be heard
in the State or federal courts of Minnesota, and all parties waive any objection to the jurisdiction
thereof, whether based on convenience or otherwise.
Section 10.12. Provisions Not Merged With Deed. None of the provisions of this
Agreement are intended to or will be merged by reason of any deed transferring any interest in
the Redevelopment Property and an y deed will not be deemed to affect or impair the provisions
and covenants of this Agreement.
Section 10.13. Approvals. Unless otherwise specified, any approval required by the
HRA or the City under this Agreement may be given by the HRA staff or City staff, and any
approval by either the HRA or the City will be deemed to be the approval of both the HRA and
the City. Except where this Agreement expressly provides otherwise, each part agrees not to
unreasonably withhold, condition, or delay any approval or consent required of it under this
Agreement.
Section 10.14. Termination. This Agreement terminates as to each Phase on the
Termination Date for that Phase, except that termination of this Agreement does not terminate,
limit or affect the rights of any party th at arise under this Agreement before the Termination
Date.
Section 10.15. Public Art. Redeveloper is obligated to expend at least $250,000.00 for
public artwork to be placed in prominent locations on the Property, on the exterior of the Minimum
Improvements. Prior to the commission of the public artwork, the public artwork shall be approved
by the City, which approval shall not be unreasonably withheld. The artwork shall be installed prior
to issuance of the Certificate of Occupancy for the applicable Phase.
Section 10.16. Park Dedication. The Redeveloper will pay applicable park dedication
fees to the City at the time of issuance of a building permit for any applicable Phase. The City
agrees that when a building permit is pulled for any Phase, the Redeveloper’s park dedication
payment (which may be required by the City in lieu of land dedication) will be calculated based
on the City’s park dedication fees that are in existence as of the effective date of this Agreement
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and, unless otherwise agreed to by the parties in the future, said payments shall be made at the
time of issuance of a building permit for the applicable Phase, as the case may be. The current
park dedication fee for multiple family residential subdivisions is $3,000 per unit while the
commercial fee is an amount equal to five (5) percent of the fair market value of the commercial
land as estimated by the county assessor. Park dedication fees are typically due with final plat
approval.
Section 10.17. Miscellaneous.
(a) No transfer of the Redevelopment Property or this Agreement without City and
HRA consent which will not be unreasonably withheld;
(b) Redeveloper will retain a management company with experience in the
management of multifamily rental housing developments, subject to reasonable approval by the
HRA;
(c) The City and Redeveloper have applied and received a Metropolitan Council
TOD Grant of $1,250,000. The City and Redeveloper expect to apply for Hennepin County
TOD Grant funding and MN DEED Redevelopment Grant funding as well. These grants have
been accounted for in the Redevelopers Proforma. Any other future grants beyond these for any
future applicable Phase that are received will reduce the principal amount of the Note for the
applicable Phase.
Section 10.18. Commercial Space in Phase IB – Building C and Phase ID. The intent is
to create opportunities for neighborhood serving commercial space for small businesses
including minority owned or operated, and locally or regionally owned or operated businesses.
The HRA and Redeveloper agree to collaborate to accomplish the goal of providing up to 50% of
the 17,000 square feet of Commercial Space available to these users, with a minimum
requirement of 40%. The outcomes of the collaboration will be outlined in a business plan
approved by City staff and the Redeveloper.
Section 10.19. PUD Agreement/Subdivision. The City and HRA and the Redeveloper
have or intend to enter into a PUD Agreement (as amended, the “PUD Agreement”) regarding the
redevelopment of the Redevelopment Property, subdivision of the Redevelopment Property,
planning and zoning approvals related to the Redevelopment Property, and improvements to be
made by the Redeveloper to the Redevelopment Property, which such PUD Agreement is
incorporated by reference into and made a part of this Agreement as if fully set forth herein.
All defined terms of the PUD Agreement shall have the same meaning in this Agreement
and all other requirements of the PUD Agreement as to the Minimum Improvements and the
Construction Plans shall be satisfied and adhered to by the Redeveloper as if such requirements
were fully set forth in this Agreement.
Section 10.20. Rent Control Provisions. The City, HRA and Redeveloper agree that any
rental units within any phase at the Redevelopment Property shall be excluded from any future
adopted rent control provisions.
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Section 10.21. Parking Rental. The Redeveloper intends to rent parking spaces in the
underground garage to tenants in Buildings B, C, and D of the Minimum Improvements for
approximately $75 to $150 per parking space per month initially. The Redeveloper agrees that
the monthly rental rate charged for each underground parking space will be the same for all
tenants of the applicable Phase within the Minimum Improvements. The Redeveloper agrees
that it will not charge rent for parking spaces in the underground garage to tenants in Building A
of the Minimum Improvements.
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IN WITNESS WHEREOF, the City, the HRA and the Redeveloper have caused this
Agreement to be duly executed in their names and behalves on or as of the date first above
written.
CITY OF HOPKINS, MINNESOTA:
By:
Patrick Hanlon
Its: Mayor
By:
Michael Mornson
Its: City Manager
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument as acknowledged before me this _____ day of ____________,
2022, by Patrick Hanlon, the Mayor for the City of Hopkins, Minnesota, a Minnesota municipal
corporation, respectively, on behalf of the City.
____________________________________
Notary Public
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument as acknowledged before me this _____ day of ____________,
2022, by Michael Mornson, the City Manager for the City of Hopkins, Minnesota, a Minnesota
municipal corporation, respectively, on behalf of the City.
____________________________________
Notary Public
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HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY
OF HOPKINS:
By:
Patrick Hanlon
Its: Chair
By:
Michael Mornson
Its: Executive Director
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument as acknowledged before me this _____ day of ____________,
2022, by Patrick Hanlon, the Chair of the Housing and Redevelopment Authority in and for the
City of Hopkins, a public body corporate and politic under the laws of Minnesota, on behalf of
the Housing and Redevelopment Authority.
____________________________________
Notary Public
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument as acknowledged before me this _____ day of ____________,
2022, by Michael Mornson, the Executive Director of the Housing and Redevelopment Authority
in and for the City of Hopkins, a public body corporate and politic under the laws of Minnesota,
on behalf of the Housing and Redevelopment Authority.
____________________________________
Notary Public
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REDEVELOPER:
ALATUS HOPKINS MD LLC, a Delaware limited
liability company
By: ____________________________
Christian B. Osmundson
Its: Vice President
STATE OF MINNESOTA )
) ss.
COUNTY OF __________ )
The foregoing instrument was acknowledged before me this ______ day o f
____________, 2022, by Christian B. Osmundson, the Vice President of Alatus Hopkins MD
LLC , a Delaware limited company, on behalf of the company.
__________________________________
Notary Public
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EXHIBIT A TO
REDEVELOPMENT AGREEMENT
LEGAL DESCRIPTION OF REDEVELOPMENT PROPERTY
A portion of the property legally described below:
Lots 1, and 2, Block 1, Mile 14 On Minnehaha Creek, Hennepin County, Minnesota.
Lots 3 and 4, Block 1, Mile 14 On Minnehaha Creek, Hennepin County, Minnesota.
Lots 1 and 2, Block 2, Mile 14 On Minnehaha Creek, Hennepin County, Minnesota.
Outlot C, Mile 14 On Minnehaha Creek, Hennepin County, Minnesota.
(Torrens Property, Certificate of Title Numbers 1547004, 1547005, 1547006, 1547007,
1547008, 1547009 and 1547012)
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EXHIBIT B TO REDEVELOPMENT AGREEMENT
DEPICTION OF THE REDEVELOPMENT PROPERTY
AND MINIMUM IMPROVEMENTS
All Depictions of the Redevelopment Property and Minimum Improvements are on file
and available at City Hall.
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EXHIBIT C TO
REDEVELOPMENT AGREEMENT
PRELIMINARY PLAN DOCUMENTS
All preliminary plan documents are on file and available at City Hall.
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EXHIBIT D TO
REDEVELOPMENT AGREEMENT
FORM OF CERTIFICATE OF COMPLETION
WHEREAS, City of Hopkins, Minnesota, a Minnesota municipal corporation (“City”),
and Housing and Redevelopment Authority in and for the City of Hopkins, corporate and politic
under the laws of Minnesota (“HRA”), and Alatus Hopkins MD LLC, a Delaware limited liability
compan y, formed under the laws of Minnesota (the “Redeveloper”), have entered into a certain
Contract for Private Redevelopment (the “Agreement”) dated the ____ day of ____________,
202___, and recorded in the office of the County Recorder and Registrar in Hennepin County,
Minnesota, as Document No. __________, which Agreement contained certain covenants and
restrictions regarding completion of the Minimum Improvements, as defined in the Agreement;
and
WHEREAS, the Redeveloper has performed said covenants and conditions in a manner
deemed sufficient by the HRA to permit the execution and recording of this certification.
NOW, THEREFORE, this is to certify that all construction of the Minimum
Improvements specified to be done and made by the Redeveloper has been completed and the
covenants and conditions in the Agreement have been performed by the Redeveloper, and the
County Recorder in Hennepin County, Minnesota, is hereby authorized to accept for recording
and to record the filing of this instrument, to be a conclusive determination of the satisfactory
termination of the covenants and conditions relating to completion of the Minimum
Improvements and the expiration of certain obligations contained in the Agreement to the extent
expressly provided for therein. Unless otherwise expressly provided in the Agreement,
Redeveloper shall be deemed to have satisfied its obligations under the Agreement.
Dated: _______________, 202__.
CITY OF HOPKINS, MINNESOTA:
By:
Its: Mayor
By:
Its: City M anager
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STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument as acknowledged before me this _____ day of ____________,
202__, by ____________ and ____________, the Mayor and City Manager, for the City of
Hopkins, Minnesota, a Minnesota municipal corporation, respectively, on behalf of the City.
____________________________________
Notary Public
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY
OF HOPKINS:
By:
______________________________
Its: Chair
By:
______________________________
Its: Executive Director
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument as acknowledged before me this _____ day of ____________,
202__, by ________________ and ________________________, the Chair and Executive
Director of the Housing and Redevelopment Authority in and for the City of Hopkins, a public
body corporate and politic under the laws of Minnesota, respectively, on behalf of the Housing
and Redevelopment Authority.
____________________________________
Notary Public
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EXHIBIT E TO
CONTRACT FOR PRIVATE DEVELOPMENT
FORM OF NOTES AND TERMS OF NOTES
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF HOPKINS
Section 1. Form of Notes. The Notes will be in substantially the following form,
with the blanks to be properly filled in and the principal amount and payment schedule adjusted
as of the date of issue:
UNITED STATE OF AMERICA
STATE OF MINNESOTA
HENNEPIN COUNTY
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF HOPKINS
No. R-1 $________
TAXABLE TAX INCREMENT REVENUE NOTE
SERIES 202_
Date
Rate of Original Issue
___% __________ [INSERT DATE]
Housing and Redevelopment Authority in and for the City of Hopkins (“HRA”), for
value received, certifies that it is indebted and hereby promises to pay to Alatus Hopkins MD
LLC , a Delaware limited liability company, or its registered assigns (the “Owner”), the principal
sum of $____________ and to pay interest thereon at the rate of ___ percent per annum, as and
to the extent set forth herein.
1. Payments. Principal and interest (“Payments”) are estimated to be paid on
August 1, 20__, and each February 1 and August 1 thereafter to and including February 1, 20__
(“Payment Dates”), in the amounts and from the sources set forth in Section 3 herein. Payments
will be applied first to accrued interest, and then to unpaid principal.
Payments are payable by mail to the address of the Owner or any other address as the
Owner may desi gnate upon 30 days written notice to HRA. Payments on this Note are payable
in any coin or currency of the United States of America which, on the Payment Date, is legal
tender for the payment of public and private debts.
2. Interest. Interest at the simple non-compounded rate stated herein will accrue on
the unpaid principal, commencing on the date of original issue. Interest will be computed on the
basis of a year of 360 days and charged for actual days principal is unpaid.
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3. Available Tax Increment. Payments on this Note are payable on each Payment
Date in the amount of and solely payable from “Available Tax Increment,” which will mean, on
each Payment Date, ___ percent of the Tax Increment attributable to the Redevelopment
Property (defined in the Agreement) and paid to the HRA by Hennepin County in the six months
preceding the Payment Date, all as the terms are defined in the Contract for Private
Redevelopment between the HRA and Owner dated as of ______________, 202___ (the
“Agreement”). Available Tax Increment will not include any Tax Increment if, as of any
Payment Date, there is an uncured Event of Default by the Owner under the Agreement. At the
sole discretion of the HRA, they may provide payment on the Note from other sources.
The HRA will have no obligation to pay principal of and interest on this Note on each
Payment Date from any source other than Available Tax Increment, and the failure of the HRA
to pay the entire amount of principal or interest on this Note on any Payment Date will not
constitute a default hereunder as long as the HRA pays principal and interest hereon to the extent
of Available Tax Increment. The HRA will have no obligation to pay unpaid balance of
principal or accrued interest that may remain after the final Payment on February 1, 20___.
4. Optional Prepayment. The principal sum and all accrued interest payable under
this Note is prepayable in whole or in part at any time by HRA without premium or penalty. No
partial prepayment will affect the amount or timing of any other regular payment otherwise
required to be made under this Note.
5. Termination. At the HRA’s option, this Note will terminate and the HRA’s
obligation to make any payments under this Note will be discharged upon the occurrence of an
Event of Default on the part of the Redeveloper with respect to the relevant Phase applicable to
this Note [a default with respect to any other Phase will not allow the HRA to terminate
payments under this Note] as defined in Section 9.1 of the Agreement, but only if the Event of
Default has not been cured in accordance with Section 9.2 of the Agreement.
6. Nature of Obligation. This Note is a single note in the total principal amount of
$____________ issued to aid in financing certain public redevelopment costs and administrative
costs of a Redevelopment Project undertaken by the HRA pursuant to Minnesota Statutes,
Sections 469.001 through 469.047, as amended, and is issued pursuant to the resolution (the
“Resolution”) duly adopted by the HRA on December 21, 2021, and pursuant to and in full
conformity with the Constitution and laws of the State of Minnesota, including Minnesota
Statutes, Sections 469.174 to 469.179, as amended. This Note is a limited obligation of the HRA
which is payable solely from Available Tax Increment pledged to the payment hereof under the
Resolution. This Note and the interest hereon will not be deemed to constitute a general
obligation of the State of Minnesota or any political subdivision thereof, including, without
limitation, the HRA or the City of Hopkins, Minnesota. Neither the State of Minnesota, nor any
political subdivision thereof will be obligated to pay the principal of or interest on this Note or
other costs incident hereto except out of Available Tax Increment, and neither the full faith and
credit nor the taxing power of the State of Minnesota or any political subdivision thereof is
pledged to the payment of the principal of or interest on this Note or other costs incident hereto.
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7. Estimated Tax Increment Payments. Any estimates of Tax Increment prepared by
the HRA or its financial advisors in connection with the TIF District or the Agreement are for the
benefit of the HRA, and are not intended as representations on which the Owner may rely.
The HRA MAKES NO REPRESENTATION OR WARRANTY THAT THE
AVAILABLE TAX INCREMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF
AND INTEREST ON THIS NOTE.
8. Registration and Transfer. This Note is issuable only as a fully registered note
without coupons. As provided in the Resolution, and subject to certain limitations set forth
therein, this Note is transferable upon the books of the HRA kept for that purpose at the principal
office of the Executive Director of the HRA as Registrar, by the Owner hereof in person or by
the Owner’s attorney duly authorized in writing, upon surrender of this Note together with a
written instrument of transfer satisfactory to the HRA, duly executed by the Owner. Upon the
transfer or exchange and the payment by the Owner of any tax, fee, or governmental charge
required to be paid by the HRA with respect to the transfer or exchange, there will be issued in
the name of the transferee a new Note of the same aggregate principal amount, bearing interest at
the same rate and maturing on the same dates.
This Note will not be transferred to any person other than an affiliate, or other related
entity, of the Owner unless the HRA has been provided with an investment letter in a form
substantially similar to the investment letter submitted by the Owner or a certificate of the
transferor, in a form satisfactory t o the HRA, that the transfer is exempt from registration and
prospectus delivery requirements of federal and applicable state securities laws.
Notwithstanding the foregoing, Owner may grant, pledge and assign to any lender, to secure full
payment and performance of its obligations under the loan, all of Owner’s right, title and interest
in and to this Note. The HRA consents to the assignment of this Note to
__________________________________________________, a Minnesota nonprofit
corporation without the execution of an investment letter.
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 exist, to happen,
and to be performed in order to make this Note a valid and binding limited obligation of the
HRA according to its terms, have been done, do exist, have happened, and have been performed
in due form, time and manner as so required.
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IN WITNESS WHEREOF, the board of commissioners of the Housing and
Redevelopment Authority in and for the City of Hopkins, has caused this Note to be executed
with the manual signatures of its Chair and Executive Director, all as of the Date of Original
Issue specified above.
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY OF
HOPKINS
Chair Executive Director
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REGISTRATION PROVISIONS
The ownership of the unpaid balance of the within Note is registered in the bond register
of the Executive Director of the HRA, in the name of the person last listed below.
Date of Registration Registered Owner Signature of HRA Executive Director
Alatus Hopkins MD LLC, a
Delaware limited liability
company
IDS Center
80 South 8th Street, Suite 4155
Minneapolis, MN 55402
Federal Tax ID #
______________
[End of Form of Note]
Section 2. Terms, Execution and Delivery.
2.01. Denomination, Payment. The Note will be issued as a single typewritten note
numbered R 1.
The Note will be issuable only in fully registered form. Principal of and interest on the
Note will be payable by check or draft issued by the Registrar described herein.
2.02. Dates; Interest Payment Dates. Principal of and interest on the Note will be
payable by mail to the owner of record thereof as of the close of business on the fifteenth day of
the month preceding the Payment Date, whether or not the day is a business day.
2.03. Registration. The HRA hereby appoints the Executive Director to perform the
functions of registrar, transfer agent and paying agent (the “Registrar”). The effect of
registration and the rights and duties of the HRA and the Registrar with respect thereto will be as
follows:
(a) Register. The Registrar will keep at their office a bond register in which the
Registrar will provide for the registration of ownership of the Note and the registration of
transfers and exchanges of the Note.
(b) Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the
registered owner thereof or accompanied by a written instrument of transfer, in a form
reasonably satisfactory to the Registrar, duly executed by the registered owner thereof or by an
attorney duly authorized by the registered owner in writing, the Registrar will authenticate and
deliver, in the name of the designated transferee or transferees, a new Note of a like aggregate
principal amount and maturity, as requested by the transferor. Notwithstanding the foregoing,
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the Note will not be transferred except (1) to any person other than an affiliate, or other related
entity, of the Owner unless the HRA has been provided with an investment letter in a form
substantially similar to the investment letter submitted by the Owner or a certificate of the
transferor, in a form satisfactory to the HRA, that the transfer is exempt from registration and
prospectus delivery requirements of federal and applicable state securities laws, or (2) to any
lenders of the note holder’s to secure full payment and performance of its obligations under a
loan. The HRA consents to an assignment of the Note to
_____________________________________, a Minnesota nonprofit corporation, without the
execution of an investment letter. For all other assignments, the HRA shall require an
investment letter from the assignee. The Registrar may close the books for registration of any
transfer after the fifteenth day of the month preceding each Payment Date and until the Payment
Date.
(c) Cancellation. The Note surrendered upon any transfer will be promptly cancelled
by the Registrar and thereafter disposed of as directed by the HRA.
(d) Improper or Unauthorized Transfer. When the Note is presented to the Registrar
for transfer, the Registrar may refuse to transfer the same until they are satisfied that the
endorsement on the Note or separate instrument of transfer is legally authorized. The Registrar
will incur no liability for their refusal, in good faith, to make transfers which they, in their
judgment, deem improper or unauthorized.
(e) Persons Deemed Owners. The HRA and the Registrar may treat the person in
whose name the Note is at any time registered in the bond register as the absolute owner of the
Note, whether the Note is overdue or not, for the purpose of receiving payment of, or on account
of, the principal of and interest on the Note and for all other purposes, and all the payments so
made to any regist ered owner or upon the owner’s order will be valid and effectual to satisfy and
discharge the liability of the HRA upon the Note to the extent of the sum or sums so paid.
(f) Taxes, Fees and Charges. For every transfer or exchange of the Note, the
Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for
any tax, fee, or other governmental charge required to be paid with respect to the transfer or
exchange.
(g) Mutilated, Lost, Stolen or Destroyed Note. In case the Note becomes mutilated or
is lost, stolen, or destroyed, the Registrar will deliver a new Note of like amount, maturity dates
and tenor in exchange and substitution for and upon cancellation of the mutilated Note or in lieu
of and in substitution for the Note lost, stolen, or destroyed, upon the payment of the reasonable
expenses and charges of the Registrar in connection therewith; and, in the case the Note lost,
stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that the Note was
lost, stolen, or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of
an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both
the HRA and the Registrar will be named as obligees. The Note so surrendered to the Registrar
will be cancelled and evidence of the cancellation will be given to the HRA. If the mutilated,
lost, stolen, or destroyed Note has already matured or been called for redemption in accordance
with its terms, it will not be necessary to issue a new Note prior to payment.
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2.04. Preparation and Delivery. The Note will be prepared under the direction of the
Executive Director and will be executed on behalf of the HRA by the signatures of its Chair and
Executive Director. In case any officer whose signature appears on the Note ceases to be the
officer before the delivery of the Note, the signature will nevertheless be valid and sufficient for
all purposes, the same as if the officer had remained in office until delivery. When the Note has
been so executed, it will be delivered by the HRA to the Owner following the delivery of the
necessary items delineated in Section 3.3 of the Agreement.
Section 3. Security Provisions.
3.01. Pledge. The HRA hereby pledges to the payment of the principal of and interest
on the Note all Available Tax Increment as defined in the Note. Available Tax Increment will be
applied to payment of the principal of and interest on the Note in accordance with the terms of
the form of Note set forth in Section 2 of this resolution.
3.02. Bond Fund. Until the date the Note is no longer outstanding and no principal
thereof or interest thereon (to the extent required to be paid pursuant to this resolution) remains
unpaid, the HRA will maintain a separate and special “Bond Fund” to be used for no purpose
other than the payment of the principal of and interest on the Note. The HRA irrevocably agrees
to appropriate to the Bond Fund in each year Available Tax Increment. Any Available Tax
Increment remaining in the Bond Fund will be transferred to the HRA’s account for the TIF
District upon the payment of all principal and interest to be paid with respect to the Note.
Section 4. Certification of Proceedings.
4.01. Certification of Proceedings. The officers of the HRA are hereby authorized and
directed to prepare and furnish to the Owner of the Note certified copies of all proceedings and
records of the HRA, and the other affidavits, certificates, and information as may be required to
show the facts relating to the legality and marketability of the Note as the same appear from the
books and records under their custody and control or as otherwise known to them, and all the
certified copies, certificates, and affidavits, including any heretofore furnished, will be deemed
representations of the HRA as to the facts recited therein.
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EXHIBIT F
DECLARATION OF RESTRICTIVE COVENANTS
THIS DECLARATION OF RESTRICTIVE COVENANTS, dated _________________,
202__ (the “Declaration”), by ALATUS HOPKINS MD LLC, a Delaware limited liability company
(the “Redeveloper”), is given to HOUSING AND REDEVELOPMENT AUTHORITY IN AND
FOR THE CITY OF HOPKINS , a public body corporate and politic under the laws of Minnesota
(the “HRA”).
RECITALS
WHEREAS, the HRA and Redeveloper entered into that certain Contract for Private
Development, dated _______________, 2022, filed _____________, 202__ in the Office of the
County R ecorder for Hennepin County as Document No. _________, and in the Office of the
Registrar of Titles for Hennepin County as Document No. __________ (the “Contract”); and
WHEREAS, pursuant to the Contract, the Redeveloper is obligated to cause construction of
__________________________ (the “Project”) on the property described in EXHIBIT A hereto
(the “Redevelopment Property”), and to cause compliance with certain affordability covenants
described in Section 4.5 of the Contract; and
WHEREAS, Section 4.5 of the Contract requires that the Redeveloper cause to be executed
an instrument in recordable form substantially reflecting the covenants set forth in Section 4.5 of the
Contract; and
WHEREAS, the Redeveloper intends, declares, and covenants that the restrictive covenants
set forth herein will be and are covenants running with the Redevelopment Property for the term
described herein and binding upon all subsequent owners of the Redevelopment Property for the
term described herein, and are not merely personal covenants of the Redeveloper; and
WHEREAS, capitalized terms in this Declaration have the meaning provided in the Contract
unless otherwise defined herein.
NOW, THEREFORE, in consideration of the promises and covenants hereinafter set forth,
and of other valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the Redeveloper agrees as follows:
1. Term of Restrictions.
(a) Occupancy and Rental Restrictions. The term of the occupancy restrictions set forth
in Section 3 and the term of rent restrictions set forth in Section 4 of this Declaration will commence
on the date a Certificate of Occupancy is received from the City of Hopkins, Minnesota (the “City”)
for the Project. The period from commencement to termination is the “Qualified Project Period.”
(b) Termination of Declaration. This Declaration will terminate upon 30 years after the
date a Certificate of Occupancy is received for the Project.
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(c) Removal from Real Estate Records. Upon termination of this Declaration, the HRA
will, upon request by the Redeveloper or its assigns, file any document appropriate to remove this
Declaration from the real estate records of Hennepin County, Minnesota.
2. Project Restrictions.
(a) the Redeveloper represents, warrants, and covenants that:
(i) All leases of units to Qualifying Tenants (as defined in Section 3(a)(i)
hereof) will contain clauses, among others, wherein each individual lessee:
(1) Certifies the accuracy of the statements made in its application and
Eligibility Certification (as defined in Section 3(a)(ii) hereof); and
(2) Agrees that the family income at the time the lease is executed will
be deemed substantial and material obligation of the lessee’s tenancy; that the lessee
will comply promptly with all requests for income and other information relevant to
determining low or moderate income status from the Redeveloper or the HRA, and
that the lessee’s failure or refusal to comply with a request for information with
respect thereto will be deemed a violation of a substantial obligation of the lessee’s
tenancy.
(ii) the Redeveloper will permit any duly authorized representative of the HRA
to inspect the books and records of the Redeveloper pertaining to the income of Qualifying
Tenants residing in the Project.
3. Occupancy Restrictions. The Redeveloper represents, warrants, and covenants that:
(a) Qualifying Tenants. From the commencement of the Qualified Project Period, ___ -
percent (___%) of the rental Housing Units will be occupied (or treated as occupied as provided
herein) or held vacant and available for occupancy by Qu alifying Tenants. Qualifying Tenants
means those persons and families who are determined from time to time by the Redeveloper to have
combined adjusted income that does not exceed _____ percent (___%) or ____ percent (_0%) of the
Area Median In come (“AMI”) for the applicable calendar year. For purposes of this definition, the
occupants of a residential unit will not be deemed to be Qualifying Tenants if all the occupants of
such residential unit at any time are “students,” as defined in Section 151(c)(4) of the Internal
Revenue Code of 1986, as amended (the “Code”), not entitled to an exemption under the Code. The
determination of whether an individual or family is of low or moderate income will be made at the
time the tenancy commences and on an ongoing basis thereafter, determined at least annually. If
during their tenancy a Qualifying Tenant’s income exceeds one hundred forty percent (140%) of the
maximum income qualifying as low or moderate income for a family of its size, the next available
unit (determined in accordance with the Code and applicable regulations) (the “Next Available Unit
Rule”) must be leased to a Qualifying Tenant or held vacant and available for occupancy by a
Qualifying Tenant. If the Next Available Unit Rule is violated, the Unit will not continue to be
treated as a Qualifying Unit.
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(b) Certification of Tenant Eligibility. As a condition to initial and continuing
occupancy, each person who is intended to be a Qualifying Tenant will be required annually to sign
and deliver to the Redeveloper a Certification of Tenant Eligibility substantially in the form attached
as EXHIBIT B hereto, or in any other form as may be approved by the HRA (the “Eligibility
Certification”), in which the prospective Qualifying Tenant certifies as to qualifying as low or
moderate income. In addition, the person will be required to provide whatever other information,
documents, or certifications are deemed necessary by the HRA to substantiate the Eligibility
Certification, on an ongoing annual basis, and to verify that the tenant continues to be a Qualifying
Tenant within the meaning of Section 3(a) hereof. Eligibility Certifications will be maintained on
file by the Redeveloper with respect to each Qualifying Tenant who resides in a Project unit or
resided therein during the immediately preceding calendar year.
(c) Lease. The form of lease to be utilized by the Redeveloper in renting any units in
the Project to any person who is intended to be a Qualifying Tenant will provide for termination of
the lease and consent by the person to immediate eviction for failure to qualify as a Qualifying
Tenant as a result of any material misrepresentation made by the person with respect to the
Eligibility Certification.
(d) Annual Report. The Redeveloper covenants and agrees that during the term of this
Declaration, it will prepare and submit to the HRA on or before January 31 of each year, a
certificate substantially in the form of EXHIBIT C hereto, executed by the Redeveloper, (a)
identifying the tenancies and the dates of occupancy (or vacancy) for all Qualifying Tenants in the
Project, including the percentage of the dwelling units of the Project which were occupied by
Qualifying Tenants (or held vacant and available for occupancy by Qualifying Tenants) at all times
during the year preceding the date of the certificate; (b) describing all transfers or other changes in
ownership of the Project or any interest therein; and (c) stating, that to the best knowledge of the
person executing the certificate after due inquiry, all the units were rented or available for rental on
a continuous basis during the year to members of the general public and that the Redeveloper was
not otherwise in default under this Declaration during the year.
(e) Notice of Non-Compliance. The Redeveloper will immediately notify the HRA if at
any time during the term of this Declaration the dwelling units in the Project are not occupied or
available for occupancy as required by the terms of this Declaration.
4. Rent Restrictions. For at least thirty years following the date the Project is placed in
service, the rents for ____ percent (_0%) of the units and ___ percent (___%) of the units in the
Project must not exceed ____ percent (_0%) or ___percent (___%) of the Area Median Income for
the applicable calendar year. For each unit that the Redeveloper agrees to accept Section 8 vouchers
for, such unit shall be deemed to meet the rent restrictions set forth in this Section 4.
5. Transfer Restrictions. The Redeveloper covenants and agrees that the Redeveloper
will cause or require as a condition precedent to any conveyance, transfer, assignment, or any other
disposition of the Project prior to the termination of the Rental Restrictions and Occupancy
Restrictions provided herein (the “Transfer”) that the transferee of the Project pursuant to the
Transfer assume in writing, in a form acceptable to the HRA, all duties and obligations of the
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Redeveloper under this Declaration, including this Section 4, in the event of a subsequent Transfer
by the transferee prior to expiration of the Rental Restrictions and Occupancy Restrictions provided
herein (the “Assumption Agreement”). The Redeveloper will deliver the Assumption Agreement to
the HRA prior to the Transfer.
6. Enforcement.
(a) The Redeveloper will permit, during normal business hours and upon reasonable
notice, any duly authorized representative of the HRA to inspect any books and records of the
Redeveloper regarding the Project with respect to the incomes of Qualifying Tenants.
(b) The Redeveloper will submit any other information, documents or certifications
requested by the HRA which the HRA deems reasonably necessary to substantial the Redeveloper’s
continuing compliance with the provisions specified in this Declaration.
(c) The Redeveloper acknowledges that the primary p urpose for requiring compliance
by the Redeveloper with the restrictions provided in this Declaration is to ensure compliance of the
property with the housing affordability covenants set forth in Section 4.5 of the Contract, and by
reason thereof, the Redeveloper, in consideration for assistance provided by the HRA under the
Contract that makes possible the construction of the Minimum Improvements (as defined in the
Contract) on the Redevelopment Property, hereby agrees and consents that the HRA will be entitled,
for any bre ach of the provisions of this Declaration, and in addition to all other remedies provided
by law or in equity, to enforce specific performance by the Redeveloper of its obligations under this
Declaration in a state court of competent jurisdiction. The Redeveloper hereby further specifically
acknowledges that the HRA cannot be adequately compensated by monetary damages in the event
of any default hereunder.
(d) The Redeveloper understands and acknowledges that, in addition to any remedy set
forth herein for failure to comply with the restrictions set forth in this Declaration, the HRA may
exercise any remedy available to it under Article IX of the Contract.
7. Indemnification. The Redeveloper hereby indemnifies, and agrees to defend and
hold harmless, the HRA from and against all liabilities, losses, damages, costs, expenses (including
reasonable attorneys’ fees and expenses), causes of action, suits, allegations, claims, demands, and
judgments of any nature arising from the consequences of a legal or administrative proceeding or
action brought against them, or any of them, on account of any failure by the Redeveloper to
comply with the terms of this Declaration, or on account of any representation or warranty of the
Redeveloper contained herein being untrue.
8. Agent of the HRA. Upon any default hereunder, after first providing the
Redeveloper with a reasonable amount of time to cure such default, the HRA will have the right to
appoint an agent to carry out any of its duties and obligations hereunder, and will inform the
Redeveloper of any agency appointment by written notice.
9. Severability. The invalidity of any clause, part or provision of this Declaration will
not affect the validity of the remaining portions thereof.
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10. Notices. All notices to be given pursuant to this Declaration must be in writing and
will be deemed given when mailed by certified or registered mail, return receipt requested, to the
parties hereto at the addresses set forth below, or to any other place as a party may from time to time
designate in writing. The Redeveloper and the HRA may, by notice given hereunder, designate any
further or different addresses to which subsequent notices, certificates, or other communications are
sent. The initial addresses for notices and other communications are as follows:
To the HRA: Housing and Redevelopment Authority
in and for the City of Hopkins
1010 1st Street South
Hopkins, MN 55343
Attn: Executive Director
With a copy to: Scott J. Riggs
Kennedy & Graven, Chartered
150 South 5th Street, Suite 700
Minneapolis, MN 55402
To the Redeveloper: Alatus Hopkins MD LLC
IDS Center
80 South 8th Street, Suite 4155
Minneapolis, MN 55402
Attn: Robert Lux
With Copies to: Winthrop & Weinstine, P.A.
225 South Sixth Street, Suite 3500
Minneapolis, MN 55402
Attn: John M. Stern
11. Governing Law. This Declaration is governed by the laws of the State of Minnesota
and, where applicable, the laws of the United States of America.
12. Attorneys’ Fees. In case any action at law or in equity, including an action for
declaratory relief, is brought against the Redeveloper to enforce the provisions of this Declaration,
the Redeveloper agrees to pay the reasonable attorneys’ fees and other reasonable expenses paid or
incurred by the HRA in connection with the action.
13. Declaration Binding. This Declaration and the covenants contained herein will run
with the real property comprising the Project and will bind the Redeveloper and its successors and
assigns and all subsequent owners of the Project or any interest therein, and the benefits will inure to
the HRA and its successors and assigns for the term of this Declaration as provided in Section 1(b)
hereof.
[The remainder of this page has been left intentionally blank.]
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IN WITNESS WHEREOF, the Redeveloper has caused this Declaration of Restrictive
Covenants to be signed by its respective duly authorized representatives, as of the day and year first
written above.
REDEVELOPER:
ALATUS HOPKINS MD LLC
By: ____________________________
____________________________
Its: ____________________________
STATE OF MINNESOTA )
) ss.
COUNTY OF __________ )
The foregoing instrument was acknowledged before me this ______ day of
____________, 202__, by __________________________, the ____________ of Alatus
Hopkins MD LLC, a Delaware limited company, on behalf of the company.
__________________________________
Notary Public
THIS INSTRUMENT WAS DRAFTED BY:
Kennedy & Graven, Chartered (SJR)
150 South 5th Street, Suite 700
Minneapolis, MN 55402
(612) 337-9300
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This Declaration is acknowledged and consented to by:
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY
OF HOPKINS:
By:
______________________________
Its: Chair
By:
______________________________
Its: Executive Director
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument as acknowledged before me this _____ day of ____________,
202__, by ________________ and ________________________, the Chair and Executive
Director of the Housing and Redevelopment Authority in and for the City of Hopkins, a public
body corporate and politic under the laws of Minnesota, respectively, on behalf of the Housing
and Redevelopment Authority.
____________________________________
Notary Public
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EXHIBIT A TO DECLARATION OF RESTRICTIVE COVENANTS
Legal Description
[INSERT LEGAL DESCRIPTION]
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EXHIBIT B TO DECLARATION OF RESTRICTIVE COVENANTS
Certification of Tenant Eligibility
(INCOME COMPUTATION AND CERTIFICATION)
Project: [Address]
Owner:
Unit Type: ______ 1 BR _____ 2 BR _____ 3 BR ____4 BDRM
1. I/We, the undersigned, being first duly s worn, state that I/we have read and
answered fully, frankly and personally each of the following questions for all persons (including
minors) who are to occupy the unit in the above apartment development for which application is
made, all of whom are listed below:
Name of
Members of the
Household
Relationship
To Head of
Household
Age
Place of
Employment
_____________ _____________ ___ _________________
_____________ _____________ ___ _________________
_____________ _____________ ___ _________________
_____________ _____________ ___ _________________
_____________ _____________ ___ _________________
Income Computation
2. The anticipated income of all the above persons during the 12-month period
beginning this date,
(a) including all wages and salaries, overtime pay, commissions, fees, tips and
bonuses before payroll deductions; net income from the operation of a business or
profession or from the rental of real or personal property (without deducting expenditures
for business expansion or amortization of capital indebtedness); interest and dividends; the
full amount of periodic payments received from social security, annuities, insurance
policies, retirement funds, pensions, disability or death benefits and other similar types of
periodic receipts; payments in lieu of earnings, such as unemployment and disability
compensation, worker’s compensation and severance pay; the maximum amount of public
assistance available to the above persons; periodic and determinable allowances, such as
alimony and child support payments and regular contributions and gifts received from
persons not residing in the dwelling; and all regular pay, special pay and allowances of a
member of the Armed Forces (whether or not living in the dwelling) who is the head of the
household or spouse; but
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(b) excluding casual, sporadic or irregular gifts; amounts which are specifically
for or in reimbursement of medical expenses; lump sum additions to family assets, such as
inheritances, insurance payments (including payments under health and accident insurance
and workmen’s compensation), capital gains and settlement for personal or property losses;
amounts of educational scholarships paid directly to the student or the educational
institution, and amounts paid by the government to a veteran for use in meeting the costs of
tuition, fees, books and equipment, but in either case only to the extent used for these types
of purposes; special pay to a serviceman head of a family wh o is away from home and
exposed to hostile fire; relocation payments under Title II of the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970; foster child care payments;
the value of coupon allotments for the purchase of food pursuant to the Food Stamp Act of
1964 which is in excess of the amount actually charged for the allotments; and payments
received pursuant to participation in ACTIO N volunteer programs, is as follows:
$_____________.
3. If any of the persons described above (or whose income or contributions was
included in item 2) has any savings, bonds, equity in real property or other form of capital
investment, provide:
(a) the total value of all such assets owned by all such persons: $____________;
(b) the amount of income expected to be derived from such assets in the 12
month period commencing this date: $_______________; and
(c) the amount of such income which is included in income listed in item 2:
$__________.
4. (a) Will all of the persons listed in item 1 above be or have they been full-time
students during five calendar months of this calendar year at an educational institution (other
than a correspondence school) with regular faculty and students?
Yes _________________ No ________________
(b) Is any such person (other than nonresident aliens) married and eligible to file
a joint federal income tax return?
Yes _________________ No ________________
THE UNDERSIGNED HEREBY CERTIFY THAT THE INFORMATION SET FORTH
ABOVE IS TRUE AND CORRECT. THE UNDERSIGNED ACKNOWLEDGE THAT THE
LEASE FOR THE UNIT TO BE OCCUPIED BY THE UNDERSIGNED WILL BE
CANCELLED UPON 10 DAYS WRITTEN NOTICE IF ANY OF THE INFORMATION
ABOVE IS NOT TRUE AND CORRECT.
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Head of Household
Spouse
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FOR COMPLETION BY OWNER
(OR ITS MANAGER) ONLY
1. Calculation of Eligible Tenant Income:
(a) Enter amount entered for entire household in 2 above: $__________
(b) If the amount entered in 3(a) above is greater than $5,000, enter the greater
of (i) the amount entered in 3(b) less the amount entered in 3(c) or (ii) 10% of the amount
entered in 3(a): $__________
(c) TOTAL ELIGIBLE INCOME (Line 1(a) plus Line 1(b)): $__________
2. The amount entered in 1(c) is less than or equal to 60% of median income for the
area in which the Project is located, as defined in the Declaration. 60% is necessary for status as a
“Qualifying Tenant” under Section 3(a) of the Declaration.
3. Number of apartment unit assigned: ___________.
4. This apartment unit was ____ was not ____ last occupied for a period of at least
31 consecutive days by persons whose aggregate anticipated annual income as certified in the above
manner upon their initial occupancy of the apartment unit was less than or equal to 60% of Median
Income in the area.
5. Check as applicable: _______ Applicant qualifies as a Qualifying Tenant (tenants of
at least __ units must meet), or ____ Applicant otherwise qualifies to rent a unit.
THE UNDERSIGNED HEREBY CERTIFIES THAT HE/SHE HAS NO KNOWLEDGE OF
ANY FACTS WHICH WOULD CAUSE HIM/HER TO BELIEVE THAT ANY OF THE
INFORMATION PROVIDED BY THE TENANT MAY BE UNTRUE OR INCORRECT.
ALATUS HOPKINS MD LLC, a Delaware limited
liability company
By: ____________________________
____________________________
Its: ____________________________
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EXHIBIT C TO DECLARATION OF RESTRICTIVE COVENANTS
Certificate of
Continuing Program Compliance
Date: ___________________
The following information with respect to the Project located at 325 Blake Road, Hopkins,
Minnesota (the “Project”), is being provided by Alatus Hopkins MD LLC, a Delaware limited
liability company, formed under the laws of Minnesota (the “Owner”) to the Housing and
Redevelopment Authority in and for the City of Hopkins, a public body corporate and politic
under the laws of Minnesota (“HRA”), pursuant to that certain Declaration of Restrictive
Covenants, dated _________________, 202__ (the “Declaration”), with respect to the Project:
(A) The total number of residential units which are available for occupancy is
120. The total number of these units occupied is _________________.
(B) The following residential units (identified by unit number) are currently
occupied by “Qualifying Tenants,” as the term is defined in the Declaration (for a total of
____units):
1 BR Units:
2 BR Units:
3 BR Units:
(C) The following residential units which are included in (B) above, have been
re-designated as units for Qualifying Tenants since _______________, 20___, the date on
which the last “Certificate of Continuing Program Compliance” was filed with the HRA by
the Owner:
Unit
Number
Previous Designation
of Unit (if any)
Replacing
Unit Number
___________ _________________ _________________
___________ _________________ _________________
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(D) The following residential units are considered to be occupied by Qualifying
Tenants based on the information set forth below:
Unit
Number
Name of Tenant
Number of
Persons
Residing in
the Unit
Number of
Bedrooms
Total Adjusted
Gross Income
Date of Initial
Occupancy
Rent
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(E) The Owner has obtained a “Certification of Tenant Eligibility,” in the form
provided as EXHIBIT B to the Declaration, from each Tenant named in (D) above, and each
such Certificate is being maintained by the Owner in its records with respect to the Project.
Attached hereto is the most recent “Certification of Tenant Eligibility” for each Tenant
named in (D) above who signed such a Certification since ______________, 20___, the date
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on which the last “Certificate of Continuing Program Compliance” was filed with the HRA
by the Owner.
(F) In renting the residential units in the Project, the Owner has not given
preference to any particular group or class of persons (except for persons who qualify as
Qualifying Tenants); and none of the units listed in (D) above have been rented for
occupancy entirely by students, no one of which is entitled to file a joint return for federal
income tax purposes. All of the residential units in the Project have been rented pursuant to
a written lease, and the term of each lease is at least twelve (12) months.
(G) The information provided in this “Certificate of Continuing Program
Compliance” is accurate and complete, and no matters have come to the attention of the
Owner which would indicate that any of the information provided herein, or in any
“Certification of Tenant Eligibility” obtained from the Tenants named herein, is inaccurate
or incomplete in any respect.
(H) The Project is in continuing compliance with the Declaration.
(I) The Owner certifies that as of the date hereof, 40% of the residential
dwelling units in the Project are occupied or held open for occupancy by Qualifying
Tenants, as defined and provided in the Declaration.
(J) The rental levels for each Qualifying Tenant comply with the maximum
permitted under the Declaration.
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IN WITNESS WHEREOF, I have hereunto affixed my signature, on behalf of the Owner,
on ____________________, 202__.
ALATUS HOPKINS MD LLC, a Delaware limited
liability company
By: ____________________________
____________________________
Its: ____________________________
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EXHIBIT G
FORM OF MINIMUM ASSESSMENT AGREEMENT
[This Minimum Assessment Agreement shall be updated from this generic
form for each Phase of the Minimum Improvements.]
THIS MINIMUM ASSESSMENT AGREEMENT, made on or as of the ____ day of
____________, 2021 (the “Minimum Assessment Agreement”), is between the Housing and
Redevelopment Authority in and for the City of Hopkins, a public body corporate and politic
under the laws of Minnesota (the “HRA”), and Alatus Hopkins MD LLC, a Delaware limited
liability company, formed under the laws of Minnesota, (the “Redeveloper”).
WITNESSETH
WHEREAS, the HRA and the Redeveloper have entered into that certain Contract for
Private Development, dated _______________, 202__ (the “Contract”), regarding the acquisition of
property, the construction of multiple buildings containing approximately 800 multi-family units,
with 688 units of apartments, and 112 senior cooperative units with affordable levels within each
building; construction of 33 for sale town homes, 8,000 sq. ft. of ground floor retail, 1,000 sq. ft.
sky lounge and two (2) 4,500 sq. ft. standalone restaurant pads (the “Minimum Improvements”),
affordable to households as set forth in the Contract, to be constructed on property legally
described in Exhibit A (the “Redevelopment Property”); and
WHEREAS, the HRA and the Redeveloper desire to establish a minimum market value for
the Redevelopment Property and the Minimum Improvements to be constructed thereon, pursuant
to Minnesota Statutes, Section 469.177, subdivision 8; and
WHEREAS, the HRA and the County Assessor (the “Assessor”) have reviewed the
preliminary plans and specifications for the Minimum Improvements and have inspected such
improvements;
NOW, THEREFORE, the parties to this Minimum Assessment Agreement, in consideration
of the promises, covenants and agreements made by each to the other, do hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined have the definition given
such terms in the Contract.
2. The minimum market value which shall be assessed for ad valorem tax purposes for
the Redevelopment Property, together with the Minimum Improvements constructed thereon, shall
be $__________ or such lesser amount as established by the applicable assessing agency as of
January 2, 20__, notwithstanding the progress of construction by s uch date, until January 2, 20__.
3. The minimum market value which shall be assessed for ad valorem tax purposes for
the Redevelopment Property, together with the Minimum Improvements constructed thereon, shall
be $___________ or such lesser amount as established by the applicable assessing agency as of
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January 2, 20__, notwithstanding the progress of construction by such date, and as of each January 2
thereafter until termination of this Minimum Assessment Agreement under Section 4 hereof.
4. The minimum market value herein established shall be of no further force and effect
and this Minimum Assessment Agreement shall terminate on the earlier of (i) date the principal of
and interest on the Tax Increment Revenue Note delivered to the Redeveloper by the HRA
pursuant to the terms of Contract is paid in full; or (ii) the date the Tax Increment Financing
District No. 1-6 established by the HRA and the City of Hopkins, Minnesota is decertified. The
HRA shall execute a certificate or affidavit upon the occurrence of a termination event referred to in
this Section 4 indicating that this Minimum Assessment Agreement has terminated and shall supply
such certificate to the Redeveloper for recording.
5. This Minimum Assessment Agreement shall be promptly recorded by the HRA.
The Redeveloper shall pay all costs of recording.
6. Neither the preambles nor provisions of this Minimum Assessment Agreement are
intended to, nor shall they be construed as, modifying the terms of the Contract.
7. This Minimum Assessment Agreement shall inure to the benefit of and be binding
upon the successors and assigns of the parties.
8. Each of the parties has authority to enter into this Minimum Assessment Agreement
and to take all actions required of it, and has taken all actions necessary to authorize the execution
and delivery of this Minimum Assessment Agreement.
9. In the event any provision of this Minimum Assessment Agreement shall be held
invalid and unenforceable by any court of competent jurisdiction, such holding shall not invalidate
or render unenforceable any other provision hereof.
10. The parties hereto agree that they will, from time to time, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, such supplements, amendments and
modifications hereto, and such further instruments as may reasonably be required for correcting any
inadequate, or incorrect, or amended description of the Redevelopment Property o r the Minimum
Improvements or for carrying out the expressed intention of this Minimum Assessment Agreement.
11. This Minimum Assessment Agreement may not be amended nor any of its terms
modified except by a writing authorized and executed by all parties hereto.
12. This Minimum Assessment Agreement may be simultaneously executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
13. This Minimum Assessment Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
(The remainder of this page is intentionally left blank.)
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IN WITNESS WHEREOF, the HRA and the Redeveloper have caused this Minimum
Assessment Agreement to be executed in their respective corporate names by their duly authorized
officers, all as of the date and year first written above.
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY
OF HOPKINS:
By:
______________________________
Its: Chair
By:
______________________________
Its: Executive Director
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument as acknowledged before me this _____ day of ____________,
202__, by ________________ and ________________________, the Chair and Executive
Director of the Housing and Redevelopment Authority in and for the City of Hopkins, a public
body corporate and politic under the laws of Minnesota, respectively, on behalf of the Housing
and Redevelopment Authority.
____________________________________
Notary Public
This document was drafted by:
KENNEDY & GRAVEN, CHARTERED (SJR)
150 South 5th Street, Suite 700
Minneapolis, MN 55402
Telephone: (612) 337-9300
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REDEVELOPER:
ALATUS HOPKINS MD LLC, a Delaware limited
liability company
By: ____________________________
____________________________
Its: ____________________________
STATE OF MINNESOTA )
) ss.
COUNTY OF __________ )
The foregoing instrument was acknowledged before me this ______ day of
____________, 202__, by __________________________, the __________________ of Alatus
Hopkins MD LLC , a Delaware limited company, on behalf of the company.
__________________________________
Notary Public
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CERTIFICATION BY COUNTY ASSESSOR
The undersigned, having reviewed the plans and specifications for the improvements to be
constructed and the market value assigned to the land upon which the improvements are to be
constructed, hereby certifies as follows: the undersigned Assessor, being legally responsible for the
assessment of the above-described property, hereby certifies that the market values assigned to the
land and improvements are reasonable.
ASSESSOR FOR HENNEPIN COUNTY
By
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this ___ day of ____________,
202___, by _________________, the County Assessor of Hennepin County, Minnesota.
Notary Public
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EXHIBIT A TO MINIMUM ASSESSMENT AGREEMENT
LEGAL DESCRIPTION
[INSERT LEGAL DESCRIPTION]
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EXHIBIT H TO
REDEVELOPMENT AGREEMENT
FORM OF INVESTMENT LETTER
To Housing and Redevelopment Authority in and for the City of Hopkins (“HRA”)
Attention: Executive Director
Dated: __________________, 202___
Re: $__________ Tax Increment Revenue Note (Alatus Hopkins MD LLC TIF Project No. 1-6) -
325 Blake
The undersigned, as Purchaser of $_________ in principal amount of the above-
captioned Tax Increment Revenue Note (the “Note”), approved by the Board of Commissioners
of the Housing and Redevelopment Authority in and for the City of Hopkins on ___________,
202__, hereby represents to you and to Kennedy & Graven, Chartered, Minneapolis, Minnesota,
as legal counsel to the HRA, as follows:
1. [For First Purchaser - We understand and acknowledge that the Note is
delivered to the Purchaser on this date pursuant to the Contract for Private Redevelopment by
and between the HRA and the Purchaser dated September 1, 2022 (the “Agreement”)] [For All
Subsequent Owners of Note – We acknowledge receipt of the Tax Increment Revenue Note
(Alatus Hopkins MD LLC TIF Project No. 1-6) - 325 Blake, in the principal amount of
$_________].
2. The Note is payable as to principal and interest solely from Available Tax
Increment pledged to the Note, as defined therein.
3. We have sufficient knowledge and experience in financial and business matters,
including purchase and ownership of municipal obligations, to be able to evaluate the risks and
merits of the investment represented by the purchase of the above-stated principal amount of the
Note.
4. We acknowledge that no offering statement, prospectus, offering circular or other
comprehensive offering document or disclosure containing material information with respect to
the HRA and the Note has been issued or prepared by the HRA, and that, in due diligence, we
have made our own inquiry and analysis with respect to the HRA, the Note and the security
therefor, and other material factors affecting the security and payment of the Note.
5. We acknowledge that we have either been supplied with or have access to
information, including financial statements and other financial information, to which a
reasonable investor would attach significance in making investment decisions, and we have had
the opportunity to ask questions and receive answers from knowledgeable individuals concerning
the HRA, the Note and the security therefor, and that as reasonable investors we have been able
to make our decision to purchase the above-stated principal amount of the Note.
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6. We have been informed that the Note (i) is not being registered or otherwise
qualified for sale under the “Blue Sky” laws and regulations of an y state, or under federal
securities laws or regulations, (ii) will not be listed on any stock or other securities exchange, and
(iii) will carr y no rating from any rating service.
7. We acknowledge that the HRA and Kennedy & Graven, Chartered, as legal
counsel to the HRA, have not made any representations or warranties as to the status of interest
on the Note for the purpose of federal or state income taxation.
8. We represent to you that we are purchasing the Note for our own account and not
for resale or other distribution thereof, except to the extent otherwise provided in the Note or as
otherwise approved in writing by the HRA.
9. All capitalized terms used herein have the meaning provided in the Agreement
unless the context clearly requires otherwise.
10. The Purchaser’s federal tax identification number is ____________
11. We acknowledge receipt of the Note on the date hereof.
IN WITN ESS WHEREOF, the undersigned has executed this Investment Letter as of the
date and year first written above.
REDEVELOPER:
ALATUS HOPKINS MD LLC, a Delaware limited
company
By: ____________________________
____________________________
Its: Chief Manager
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EXHIBIT I
TOTAL DEVELOPMENT COSTS
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EXHIBIT J
SAMPLE LOCKBACK CALCULATION
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PARTIAL ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS PARTIAL ASSIGNMENT AND ASSUMPTION AGREEMENT, made as of
September 1, 2022 (the “Partial Assignment and Assumption Agreement”), is between Alatus
Hopkins MD LLC, a Delaware limited liability company, as assignor (the “Redeveloper”),
Alatus Hopkins LIHTC I LLC, a Minnesota limited liability company, as assignee (the
“Affordable Housing Redeveloper”), the Housing and Redevelopment Authority in and for the
City of Hopkins, a public body corporate and politic under the laws of Minnesota (the “HRA”),
and the City of Hopkins, Minnesota, a Minnesota municipal corporation (the “City”).
RECITALS
WHEREAS, the City, the HRA, and the Redeveloper entered into a Contract for Private
Redevelopment, dated as of September 1, 2022 (the “Contract”), pursuant to which the
Redeveloper agreed to redevelop the property located at 325 Blake Road in the City (the
“Redevelopment Property”) and construct multiple buildings containing approximately 800
multifamily units, with 688 rental apartment units and 112 senior cooperative units, meeting
certain affordability levels within each building, approximately 33 for sale town homes, 8,000
square feet of ground-floor retail, a 1,000-square foot sky lounge, and two 4,500-square foot
standalone restaurant pads (the “Minimum Improvements”); and
WHEREAS, as part of the Minimum Improvements, the Redeveloper has proposed to
construct approximately 116 multifamily housing units, with affordable levels within Building A
as set forth in the Contract (the “Phase IA, Building A Minimum Improvements”), on the portion
of the Redevelopment Property legally described in EXHIBIT A attached hereto (the “Phase IA,
Building A Property”); and
WHEREAS, as contemplated in the Contract, the HRA has proposed to make a
subordinate loan to the Redeveloper (the “TIF Loan”) in the principal amount of $3,750,000
from pooled tax increment from Tax Increment Financing District No. 2-11 within
Redevelopment Project No. 2 in the City to reimburse the Redeveloper for a portion of the
Redeveloper’s redevelopment costs associated with Phase IA, Building A Minimum
Improvements; and
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WHEREAS, as contemplated in the Contract, the HRA has proposed to issue a tax
increment revenue note (the “TIF Note”) in the maximum principal amount of $1,530,000 to the
Redeveloper to reimburse the Redeveloper for a portion of the Redeveloper’s redevelopment
costs with respect to the Phase IA, Building A Minimum Improvements, which TIF Note will be
payable from tax increment revenue generated from property within Tax Increment Financing
District No. 1-6 (325 Blake) within Redevelopment Project No. 1 in the City; and
WHEREAS, in connection with the requirements and timing imperatives of certain other
financing for the Phase IA, Building A Minimum Improvements, the Affordable Housing
Developer was required to acquire fee title to the Phase IA, Building A Property on July 7, 2022;
and
WHEREAS, the Redeveloper has proposed to assign its rights and responsibilities with
respect to the construction of the Phase IA, Building A Minimum Improvements to the
Affordable Housing Redeveloper, which assignment is permissible under the terms of
Section 8.2 of the Contract; and
WHEREAS, the Redeveloper has proposed to assign its rights and responsibilities with
respect to the Phase IA, Building A Minimum Improvements as well as its interest in the TIF
Loan and the TIF Note to the Affordable Housing Redeveloper, and the Affordable Housing
Redeveloper has proposed to assume the rights and responsibilities of the Redeveloper with
respect to the Phase IA, Building A Minimum Improvements as well as the interest of the
Affordable Housing Redeveloper in the TIF Loan and the TIF Note; and
WHEREAS, the Redeveloper also intends to assign to the Affordable Housing
Redeveloper all of the Redeveloper’s interest in and its rights and obligations under the
Declaration of Restrictive Covenants and the Minimum Assessment Agreement to be executed in
connection with the Phase IA, Building A Minimum Improvements; and
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. Definitions. All capitalized terms not defined herein shall have the meanings
given such terms in the Contract.
2. Partial Assignment and Assumption. Section 8.2 of the Contract allows the
Redeveloper to assign its rights and duties under the Contract to another entity if: (a) the
proposed transfer will occur prior to issuance of the Certificate of Completion for the Phase IA,
Building A Minimum Improvements, the proposed transferee has the qualifications and financial
responsibility, in the reasonable judgment of the HRA, necessary and adequate to fulfill the
obligations undertaken in the Contractor by the Redeveloper; and (b) in all events, any proposed
transferee expressly assumes to be bound by all of the obligations of the Redeveloper under the
Contract. The Redeveloper hereby assigns to the Affordable Housing Redeveloper all of its
interest in the Contract related to the construction of Phase IA, Building A Minimum
Improvements and its rights and obligations under the Contract related to the construction of
Phase IA, Building A Minimum Improvements. Additionally, the Redeveloper hereby assigns to
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the Affordable Housing Redeveloper all of its interest in the Declaration of Restrictive
Covenants related to rent and income restrictions for the Phase IA, Building A Minimum
Improvements, and the Minimum Assessment Agreement related to the Phase IA, Building A
Minimum Improvements and its rights and obligations under the Declaration of Restrictive
Covenants related to rent and income restrictions for the Phase IA, Building A Minimum
Improvements and the Minimum Assessment Agreement related to the Phase IA, Building A
Minimum Improvements. The Affordable Housing Redeveloper hereby accepts such rights and
assumes such obligations (the “Affordable Housing Redeveloper Obligations”), subject to the
terms of this Partial Assignment and Assumption Agreement. The HRA and the City
acknowledge and consent to such assignment and agree that the Affordable Housing
Redeveloper satisfies the requirements of a transferee set forth in Section 8.2 of the Contract.
3. Covenants of Affordable Housing Redeveloper. The Affordable Housing
Redeveloper expressly assumes all of the Affordable Housing Redeveloper Obligations with
respect to the Phase IA, Building A Minimum Improvements, and the Affordable Housing
Redeveloper agrees to be subject to all the conditions and restrictions to which the Redeveloper
is subject under the Contract with respect to the Phase IA, Building A Minimum Improvements.
4. Release of Redeveloper. This Partial Assignment and Assumption Agreement
shall be deemed to fully and unconditionally release and discharge the Redeveloper from any
obligations with respect to the Affordable Housing Redeveloper Obligations, such obligations
having been assumed by the Affordable Housing Redeveloper.
5. Assignment of Tax Increment Revenue. The Redeveloper assigns its interests in
and rights to the TIF Loan to the Affordable Housing Redeveloper, and the Affordable Housing
Redeveloper hereby assumes such interests and rights. The HRA and the City consent to such
assignment and assumption. To document the TIF Loan, the HRA and the Affordable Housing
Redeveloper will execute a Loan Agreement, and the Affordable Housing Redeveloper will
execute and deliver a Promissory Note and a Mortgage to the HRA to evidence the Affordable
Housing Redeveloper’s repayment obligations.
Furthermore, the Redeveloper assigns its interests in and rights to the TIF Note to the
Affordable Housing Redeveloper, and the Affordable Housing Redeveloper hereby assumes such
interests and rights. The HRA and the City consent to such assignment and assumption. Upon
the satisfaction of the conditions precedent to the issuance of the TIF Note set forth in the
Contract, the HRA shall issue the TIF Note to the Affordable Housing Redeveloper.
6. Notices. For purposes of providing notice to the Redeveloper under the Contract
with respect to the Phase IA, Building A Minimum Improvements, the Affordable Housing
Redeveloper’s address is set forth below:
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To the Affordable Housing
Redeveloper:
With copies to:
And to:
And to:
Alatus Hopkins LIHTC I LLC
c/o Alatus LLC
80 South Eighth Street, Suite 4155
Minneapolis, MN 55402
Attn: Robert C. Lux and Chris Osmundson
Winthrop & Weinstine, P.A.
225 South Sixth Street, Suite 3500
Minneapolis, MN 55402
Attention: John M. Stern, Esq.
Raymond James Tax Credit Fund XX
L.L.C.
c/o Raymond James Affordable Housing
Investments
880 Carillon Parkway
St. Petersburg, FL 33716
Attention: Steven J. Kropf
Nixon Peabody LLP
Exchange Place
53 State Street
Boston, MA 02109
Attention: Nate Bernard, Esq.
7. Governing Law. It is agreed that this Partial Assignment and Assumption
Agreement shall be governed by, construed, and enforced in accordance with the laws of the
State of Minnesota.
8. Entirety of Agreement. This Partial Assignment and Assumption Agreement
shall constitute the entire agreement between the parties and any prior understanding or
representation of any kind preceding the date of this Partial Assignment and Assumption
Agreement shall not be binding upon either party except to the extent incorporated in this
Agreement.
9. Modification. Any modification of this Partial Assignment and Assumption
Agreement or additional obligation assumed by either party in connection with this Partial
Assignment and Assumption Agreement shall be binding only if placed in writing and signed by
each party or an authorized representative of each party.
10. Execution in Counterparts. This Partial Assignment and Assumption Agreement
may be executed, acknowledged, and delivered in any number of counterparts and each of such
counterparts shall constitute an original but all of which together shall constitute one agreement.
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11. Recording. The HRA intends to record this Partial Assignment and Assumption
Agreement among the land records of Hennepin County, Minnesota, and the Affordable Housing
Redeveloper agrees to pay for the cost of recording same.
12. Understanding Regarding Phase IA, Building A Minimum Improvements. For
the avoidance of doubt, the parties hereto understand that the Partial Assignment and
Assumption Agreement only relates to the Phase IA, Building A Minimum Improvements.
(The remainder of this page is intentionally left blank.)
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IN WITNESS WHEREOF, the Redeveloper, the Affordable Housing Redeveloper, the
Authority, and the City have caused this Partial Assignment and Assumption Agreement to be
executed as of the date and year first written above.
ALATUS HOPKINS MD LLC, a Delaware
limited liability company
By
Christian B. Osmundson
Its Vice President
STATE OF MINNESOTA )
) SS.
COUNTY OF _________ )
The foregoing instrument was acknowledged before me this ____ day of September,
2022, by Christian B. Osmundson, the Vice President of Alatus Hopkins MD LLC, a Delaware
limited liability company, on behalf of the Redeveloper.
Notary Public
This instrument drafted by:
KENNEDY & GRAVEN, CHARTERED (JAE)
150 South Fifth Street, Suite 700
Minneapolis, MN 55402
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HP145-47-820818.v3
Execution page of the Affordable Housing Redeveloper, as assignee, to the Partial Assignment
and Assumption Agreement, dated as of the date and year first written above.
ALATUS HOPKINS LIHTC I LLC, a Minnesota
limited liability company
By: Alatus Hopkins LIHTC I MM LLC, a
Minnesota limited liability company
Its: Managing Member
By:
Name: Christian B. Osmundson
Title: Vice President
STATE OF MINNESOTA )
) ss
COUNTY OF ____________ )
The foregoing instrument was acknowledged before me this ____ day of September, 2022,
by Christian B. Osmundson, the Vice President of Alatus Hopkins LIHTC I MM LLC, a Minnesota
limited liability company, the managing member of Alatus Hopkins LIHTC I LLC, a Minnesota
limited liability company, on behalf of the Affordable Housing Redeveloper.
Notary Public
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HP145-47-820818.v3
Execution page of the HRA to the Partial Assignment and Assumption Agreement, dated as of
the date and year first written above.
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY OF
HOPKINS
By
Its Chair
By
Its Executive Director
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this ____ day of September, 2022,
by Patrick Hanlon, the Chair of the Housing and Redevelopment Authority in and for the City of
Hopkins, a public body corporate and politic under the laws of Minnesota, on behalf of the HRA.
Notary Public
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this ____ day of September, 2022,
by Michael Mornson, the Executive Director of the Housing and Redevelopment Authority in and
for the City of Hopkins, a public body corporate and politic under the laws of Minnesota, on
behalf of the HRA.
Notary Public
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HP145-47-820818.v3
Execution page of the City to the Partial Assignment and Assumption Agreement, dated as of the
date and year first written above.
CITY OF HOPKINS, MINNESOTA
By
Its Mayor
By
Its City Manager
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this ____ day of September, 2022,
by Patrick Hanlon, the Mayor of the City of Hopkins, Minnesota, a Minnesota municipal
corporation, on behalf of the City.
Notary Public
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this ____ day of September, 2022,
by Michael Mornson, the City Manager of the City of Hopkins, Minnesota, a Minnesota municipal
corporation, on behalf of the City.
Notary Public
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HP145-47-820818.v3
EXHIBIT A
LEGAL DESCRIPTION
Real property in the City of Hopkins, County of Hennepin, State of Minnesota, described as
follows:
Lot 2, Block 2, Mile 14 On Minnehaha Creek, according to the recorded plat thereof, Hennepin
County, Minnesota.
Torrens Property.
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SUB-GRANT AGREEMENT
(Metropolitan Council Livable Communities Act Grant - Transit Oriented Development Grant Program)
THIS SUB-GRANT AGREEMENT (this “Agreement”) is made as of September 1, 2022 (the “Effective Date”),
between the CITY OF HOPKINS, MINNESOTA, a Minnesota municipal corporation (the “Grantee”), and
Alatus Hopkins MD LLC, a Delaware limited liability company (the “Sub-Grantee”).
WHEREAS, on March 28, 2022, the Grantee entered into the Metropolitan Livable Communities Act Grant
Agreement with the Metropolitan Council (the “Metropolitan Council”), a copy of which is attached
hereto as Exhibit A (the “Grant Agreement”) and is incorporated herein and made part of this Agreement;
and
WHEREAS, the Grantee, the Sub-Grantee, and the Housing and Redevelopment Authority in and for the
City of Hopkins have entered into a Contract for Private Redevelopment to redevelop property in six
phases, including construction of multiple buildings containing approximately 804 multi-family units, with
692 units of apartments, and 112 senior cooperative units, with the affordability levels within each
building, construction of approximately 33 for-sale town homes, 8,000 square feet of ground floor retail,
1,000 square feet sky lounge and two 4,500 square feet standalone restaurant pads (the “Project”); and
WHEREAS, the Grant Agreement provides that the Metropolitan Council is to grant to the Grantee a sum
not to exceed $1,250,000 and $1,030,000 of such funds shall be used to fund a portion of the Sub-
Grantee’s transit oriented development of certain real property, which is legally described in the attached
Exhibit B (the “Sub-Grantee Property”); and
WHEREAS, the remaining portion of the funds ($220,000) will be provided as a loan to Alatus Hopkins
LIHTC I LLC, a Minnesota limited liability company (the “Affordable Housing Redeveloper”) and affiliate of
the Sub-Grantee to be spent on grant eligible uses (as described in the Grant Agreement); and
WHEREAS, the Grantee and the Sub-Grantee have agreed for the Sub-Grantee to assume certain duties
and responsibilities of the Grantee under the Grant Agreement in consideration of receiving funds
provided for in the Grant Agreement and subject to the terms, conditions, and limitations set forth
therein.
NOW, THEREFORE, in consideration of the premises and the mutual promises set forth herein, the parties
hereto covenant and agree as follows:
1. Grant Funds. The Grantee will distribute funds received under the Grant Agreement upon
the continuing compliance by the Sub-Grantee with its obligations hereunder. The Sub-Grantee shall use the
grant proceeds which are being provided by the Grantee under this Agreement solely for the Project and its
specific deliverables (as defined and referenced in the Grant Agreement), which includes certain placemaking
spaces, as further specified within the TOD Project Summary (attached to the Grant Agreement). The grant
proceeds shall not be used for any ineligible uses as described in the Grant Agreement. The Sub-Grantee
understands and agrees that any reduction or termination of Livable Communities Demonstration Account
funds made available to the Metropolitan Council from the Livable Communities Demonstration Account of
the Metropolitan Livable Communities Fund may result in a like reduction in the amount of the grant proceeds
that will be made available to the Sub-Grantee pursuant to this Agreement. Notwithstanding Section 2.07 of
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the Grant Agreement, the Metropolitan Council has agreed that a loan of $220,000 could be made by the
Sub-Grantee to a subrecipient (the Affordable Housing Redeveloper).
2. Grantee’s Obligations. The Grantee will be responsible for reimbursing the Sub-Grantee for
the costs of the Activities (as later defined) up to a total amount of $1,030,000, which will be funded directly
from the grant proceeds received from the Metropolitan Council under the Grant Agreement. The Grantee
will disburse funds to the Sub-Grantee pursuant to this Agreement and the Grant Agreement, based upon
reimbursement requests submitted by the Sub-Grantee and reviewed and approved by the Grantee and the
Metropolitan Council. Reimbursement requests must be accompanied by all information and documentation
needed by the Grantee pursuant to Section 2.11 of the Grant Agreement to submit a payment request form
to the Metropolitan Council. In order to ensure that all funds are drawn prior to the expiration of the grant,
all payment requests must be received by the Grantee at least 60 days prior to the grant-term expiration date
of December 31, 2024 unless extended by the Grantee in writing, otherwise any unrequested funds will be
lost. The Grantee shall have no obligation to disburse any of these funds if, at the time of disbursement, the
Sub-Grantee is in default under any of the terms of this Agreement.
3. Sub-Grantee’s Obligations. The Sub-Grantee shall perform and satisfy certain obligations of
the Grantee under the Grant Agreement. Specifically, but without limiting the foregoing, the Sub-Grantee
must perform all the following with respect to the Activities and in satisfaction of the Grant Agreement
obligations:
a. The Sub-Grantee will be responsible for performing all of the activities and deliverables on
the Property as set forth in the TOD Project Summary that is attached to the Grant
Agreement (the “Activities”). All Activities provided by the Sub-Grantee under this
Agreement must be performed to the Grantee’s and the Metropolitan Council’s reasonable
satisfaction and in accordance with all applicable federal, state, and local laws, ordinances,
rules, and regulations. The Sub-Grantee will not receive payment for Activities found by the
Grantee or the Metropolitan Council to be reasonably unsatisfactory or performed in
violation of federal, state, or local law.
b. The Sub-Grantee will comply with all requirements and conditions of the Grant Agreement
applicable to the Activities that, by their nature, must be performed by Sub-Grantee rather
than Grantee and that are conditions of award of funds under the Grant Agreement.
c. The Sub-Grantee must take all other actions as are needed to ensure compliance with the
Grant Agreement and provide such information and assistance to the Grantee as may
reasonably be needed to ensure the Grantee can comply with the requirements of the Grant
Agreement that, by their nature, must be performed by the Grantee rather than the Sub-
Grantee.
d. In order to permit the Grantee and the Metropolitan Council to monitor compliance with
this Agreement, the Sub-Grantee shall permit any person that the Grantee or the
Metropolitan Council designate, at the Grantee or the Metropolitan Council’s expense, to
visit and inspect the Property, corporate books and financial records and documents of the
Sub-Grantee as relevant to receipt and expenditure of the grant funds or this Agreement and
to discuss its affairs, finances, and accounts (as they relate to receipt and expenditure of the
grant funds or this Agreement) with the principal officers of Sub-Grantee, all at such
reasonable times and as often as the Grantee or the Metropolitan Council may reasonably
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HP145-47-816298.v5
request during the term of this Agreement and for a period of six years after the termination
of this Agreement.
e. The Sub-Grantee will not discriminate against any employee or applicant for employment
because of race, color, creed, religion, national origin, sex, marital status, status with regard
to public assistance, membership or activity in a local civil rights commission, disability,
sexual orientation or age and will take affirmative action to insure applicants and employees
are treated equally with respect to all aspects of employment, rates of pay and other forms
of compensation, and selection for training.
f. If the Sub-Grantee earns any interest or other income from the grant funds received from
the Grantee under this Agreement, the Sub-Grantee must use the interest earnings or
income only for the purposes of implementing the Activities.
g. Pursuant to Section 3.01 of the Grant Agreement, because the Project includes affordable
housing units, Grantee is required to ensure that said housing units will remain “affordable,”
as that term is defined in the Grant Agreement, for a minimum period of 30 years. Said
obligation may be satisfied if other Project funding sources require an affordability term of
at least 30 years and such term is required via a recorded declaration or other instrument. If
at any point it is determined that the Sub-Grantee is not participating in a local, state or
federal program that will ensure such affordability for the period required via formal
instrument, or if there is any other reason to believe that there are no instruments in place
to ensure the same, as required in the Grant Agreement, Sub-Grantee agrees that it will
execute any instruments to ensure such affordability, in a form that meets the Grantee’s
satisfaction. A failure to adhere to this subsection may result, at Grantee’s request, in Sub-
Grantee being required to pay back grant funds received pursuant to this Agreement.
h. Pursuant to Section 3.02 of the Grant Agreement, Sub-Grantee agrees and acknowledges
that it, as Project owner, must adopt and implement an affirmative fair housing marketing
plan for all housing units within the Project. To that end, Sub-Grantee agrees that before it
will be eligible for any grant funds under the terms of this Agreement, it shall adopt and
implement such a plan for at least 15 years, which shall substantially conform to affirmative
fair housing marketing plans published by the U.S. Department of Housing and Urban
Development (“HUD”) or sample affirmative fair housing marketing plans published by
MHFA. Such plan shall be made available to Grantee upon its request. A failure to adhere
to this subsection may result, at Grantee’s request, in Sub-Grantee being required to pay
back grant funds received pursuant to this Agreement.
i. If housing units within the Project are to be made available to households participating in
the federal Housing Choice Voucher program, Sub-Grantee must adopt and implement a
policy as required in Section 3.03 of the Grant Agreement and record a written instrument
against the Property that meets the satisfaction of both Metropolitan Council and Grantee
and ensures the ongoing implementation of said policy for at least 15 years. This shall be an
affirmative obligation of Sub-Grantee and a failure by Sub-Grantee to adhere to this
subsection may result, at Grantee’s request, in Sub-Grantee being required to pay back grant
funds received pursuant to this Agreement.
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4. Ownership and Condition of the Property. The Sub-Grantee makes the following
representations:
a. It will purchase the Property described in Exhibit B and own such Property in fee simple and
will further convey such Property, respectively, to affiliate(s) of the Sub-Grantee in
accordance with the overall development plan. The Affordable Housing Redeveloper owns
the property described in Exhibit C in fee simple. The mortgage related to the $220,000 to
be provided to the Affordable Housing Redeveloper will be recorded against the property
described in Exhibit C.
b. To the best of the Sub-Grantee’s knowledge, the Property does not violate any applicable
federal, state, or local law, ordinance, or regulation.
c. There are no actions, suits, or proceedings pending, at law or in equity, or to the knowledge
of the Sub-Grantee threatened, against or affecting it or the Property, and the Sub-Grantee
is not in default with respect to any order, writ, injunction, decree, or demand of any court
or any governmental authority.
d. The consummation of this transaction and performance of the Sub-Grantee’s obligations
under this Agreement will not result in any breach of, or constitute a default under any
mortgage, deed of trust, lease, bank loan, or credit agreement, partnership agreement, or
other instrument which affects the Sub-Grantee, or to which the Sub-Grantee is a party.
e. It has not used the Property in connection with the generation, disposal, storage, treatment,
or transportation of hazardous substances and that the Property will not be so used during
the term of this Agreement by the Sub-Grantee, its agents, tenants, or assigns, except in
compliance with a Minnesota Pollution Control Agency (“MPCA”) approved Development
Response Action Plan.
f. It has obtained or caused its contractors and/or affiliates to obtain, all the insurance
described in Section 5 of this Agreement and such policies of insurance are in full force and
effect as of the date of this Agreement.
g. The individual(s) signing this Agreement on behalf of the Sub-Grantee are duly authorized to
execute this Agreement on the Sub-Grantee’s behalf.
5. Affirmative Covenants. The Sub-Grantee hereby covenants and agrees that it shall:
a. With respect to Insurance, the Sub-Grantee will purchase and maintain such insurance, or
cause its contractors and/or affiliates to purchase and maintain such insurance, as will
protect it from claims which may arise out of, or result from, the Activities completed under
this Agreement, whether such operations be by the Sub-Grantee or by any subcontractor, or
by anyone directly employed by them, or by anyone for whose acts any one of them may be
liable.
b. With respect to the Property, Sub-Grantee shall obtain an All Risk Broad Form Insurance
Policy, including “Builder’s Risk – Completed Value Basis” insurance and commercial general
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HP145-47-816298.v5
liability in the amount of not less than $2,000,000 for each occurrence, and workers’
compensation insurance.
c. As each phase of the Project commences, an affiliate of Sub-Grantee will commence the
phase and will be assigned all the obligations set forth in the Contract related to the phase,
including but not limited to constructing the phase and purchasing the insurance described
in Section5(b). The Affordable Housing Redeveloper has purchased the property described
in Exhibit C and has been assigned all of the Contract obligations related to the first phase of
the Project. Pursuant to the loan documents related to the $220,000 Loan, the Affordable
Housing Redeveloper has agreed to comply with all requirements of the Grant Agreement.
d. To the fullest extent permitted by law, the Sub-Grantee shall defend, indemnify, and hold
harmless the Grantee and the Metropolitan Council and their officials, employees, and
agents from and against all claims, damages, losses and expenses, including but not limited
to, attorneys’ fees, arising out of or resulting from the conduct or implementation of the
Activities funded by this Agreement, except to the extent the claims, damages, losses, and
expenses arise from the Grantee or the Metropolitan Council’s own willful misconduct or
negligence. Claims included in this indemnification include, without limitation, any claims
asserted pursuant to the Minnesota Environmental Response and Liability Act (MERLA),
Minnesota Statutes Chapter 115B (CERCLA) as amended, United States Code Title 42, Section
9601 et seq., and the federal Resource Conservation and Recovery Act of 1976 (RCRA) as
amended, United States Code Title 42, Sections 6901 et seq. This obligation shall not be
construed to negate, abridge, or otherwise reduce any other right or obligation of indemnity
which otherwise would survive the expiration or termination of this Agreement. This
indemnification shall not be construed as a waiver on the part of either the Grantee or the
Metropolitan Council of any immunities or limits on liability provided by Minnesota Statutes
Chapter 466 or other applicable state or federal law.
e. Promptly pay and discharge all taxes, assessments, and other governmental charges
imposed upon it or upon its income and profits or upon the Property, and any and all claims
for labor, material or supplies or rental charges or charges of any other kind which, if unpaid,
might by law become a lien or charge upon the Property, provided, however, that the Sub-
Grantee shall not be required to pay any such tax, assessment, charge or claim, if the Sub-
Grantee is contesting the validity of such matters, in good faith, through appropriate
proceedings, and the Sub-Grantee sets aside on its books adequate reserves for the payment
of such claims.
f. Maintain the Property in good repair, working order, and condition and from time to time,
make or cause to be made all necessary renewals, replacements, and repairs so that at all
times the Sub-Grantee’s business can be conducted efficiently.
g. Establish and maintain accurate and complete accounts and records relating to the receipt
and expenditure of all grant funds received from the Grantee. Notwithstanding the
expiration and termination provisions of this Agreement, such accounts and records shall be
kept and maintained by the Sub-Grantee for a period of six years following the completion
of the Activities for six years following the expenditure of the grant funds, whichever occurs
earlier. Accounting methods shall be in accordance with generally accepted accounting
principles.
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h. The accounts and records of the Sub-Grantee shall be audited in the same manner as all
other accounts and records of the Sub-Grantee are audited and may be audited or inspected
on the Sub-Grantee’s premises or otherwise by individuals or organizations designated and
authorized by the Grantee or the Metropolitan Council at any time, following reasonable
notification to the Sub-Grantee, for a period of six years following the completion of the
Activities or six years following the expenditure of the grant funds, whichever occurs earlier.
Pursuant to Minnesota Statutes Section 16C.05, subdivision 5, the books, records,
documents, and accounting procedures and practices of the Sub-Grantee that are relevant
to this Agreement are subject to examination by the Grantee and the Metropolitan Council
and either the Legislative Auditor or the State Auditor, as appropriate, for a minimum of six
years.
i. The Sub-Grantee shall include in any contract or subcontract for the Activities appropriate
provisions to ensure contractor or subcontractor compliance with all applicable state and
federal laws and this Agreement, including, but not limited to, federal and state laws relating
to stormwater discharges (i.e. Code of Federal Regulations, Title 40, parts 122 and 123 and
the Metropolitan Council’s 2040 Water Resources Policy Plan and the local water
management plan). Along with such provisions, the Sub-Grantee shall require that
contractors and subcontractors performing activities covered by this grant obtain all
required permits, licenses, and certifications, and comply with all applicable state and federal
Occupational Safety and Health Act regulations.
j. Construct the Property to meet all applicable local codes, rehabilitation standards,
ordinances, and zoning regulations. The Grantee and the Metropolitan Council assume no
responsibility for obtaining any applicable local, state, or federal licenses, permits, bonds,
authorizations, or approvals necessary to perform or complete the Activities. The Sub-
Grantee and its contractors, if any, must comply with all applicable licensing, permitting,
bonding, authorization, and approval requirements of federal, state, and local governmental
and regulatory agencies, including conservation districts.
k. Acknowledge the financial assistance provided by the Metropolitan Council in promotional
materials, press releases, reports and publications relating to the Activities which are funded
in whole or in part with the grant funds. The acknowledgment must contain the following
or comparable language:
“Financing for this project was provided by the Metropolitan Council Metropolitan Livable
Communities Fund.”
Until the Activities are completed, the Sub-Grantee must ensure the above
acknowledgment language, or alternative language approved by the Metropolitan
Council’s authorized agent, is included on all signs (if any) located on the Property or
construction sites. The acknowledgments and signage should refer to the “Metropolitan
Council” (not the “Met Council” or the “Metro Council”).
l. Provide the Grantee with all information that is needed by the Grantee to submit the
required written progress reports and annual written reports required by Section 4.03 of the
Grant Agreement.
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6. Negative Covenants. The Sub-Grantee covenants and agrees that for the term of this
Agreement, it will not:
a. Merge or consolidate with or into any other entity.
b. Default upon any contract or fail to pay any contract or fail to pay any of its debts or
obligations as the same mature, subject to the applicable cure periods set forth in such a
contract.
c. Generate, dispose of, use, store, treat, or transport hazardous waste substances on, in, over
or across the Property or allow the Sub-Grantee’s tenants to do so; provided, however, that
Sub-Grantee may treat or remediate hazardous substances pursuant to an MPCA approved
Development Response Action Plan and Sub-Grantee and its tenants may use, store, and
transport hazardous substances on, over or across the Property as is reasonably necessary
to the use of the Property as residential, commercial, or office property provided such use,
storage, and transportation complies at all times with all applicable federal, state, and local
statutes, codes, regulations, and ordinances.
7. Miscellaneous.
a. All representations and warranties contained herein or made in writing by or on behalf of
the Sub-Grantee in connection with the transactions contemplated hereby shall be made as
of the Effective Date but survive the execution and delivery of this Agreement and the
advances hereunder. All statements contained in any certificate or other instrument
delivered by or on behalf of the Sub-Grantee pursuant thereto or in connection with the
transactions contemplated hereby shall constitute representations and warranties by the
Sub-Grantee.
b. This Agreement shall be binding upon and inure to the benefit of the successors and assigns
of the parties.
c. No amendment, change, waiver, or modification of this Agreement shall be valid unless it is
in a written document which Sub-Grantee, and the Grantee sign, and the Grantee’s waiver
of any breach or default of any of the Sub-Grantee’s obligations, agreements, or covenants
under this Agreement shall not be deemed to be a waiver of any subsequent breach of this
Agreement, or any other obligation, agreement, or covenant. The Grantee’s forbearance in
pursuing or enforcing a remedy for the Sub-Grantee’s breach of any of the obligations set
forth in this Agreement shall not be deemed a waiver of the Grantee’s rights and remedies
with respect to such breach.
d. This Agreement may be executed simultaneously in two or more counterparts, each of which
shall be an original, but all of which shall constitute one agreement.
e. This Agreement supersedes and has merged into all prior oral agreements between the
Grantee and the Sub-Grantee regarding the Activities.
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f. Any notices required or contemplated hereunder shall be effective upon the placing thereof
in the United States Mail, certified mail, return receipt requested, postage prepaid, and
addressed as follows:
If to the Grantee:
City of Hopkins
1010 1st Street South
Hopkins, MN 55343
Attn: Jan Youngquist, Community Development Coordinator
If to the Sub-Grantee:
Alatus Hopkins MD LLC
IDS Center
80 South 8th Street, Suite 4155
Minneapolis, MN 55402
Attn: Robert Lux
And copy to:
Winthrop & Weinstine, P.A.
225 South Sixth Street, Suite 3500
Minneapolis, MN 55402
Attn: John M. Stern
And with a copy to Affordable Housing Redeveloper:
Alatus Hopkins LIHTC I LLC
c/o Alatus LLC
80 South Eighth Street, Suite 4155
Minneapolis, MN 55402
Attn: Robert C. Lux and Chris Osmundson
And with a copy to the Investor Member of Affordable Housing Redeveloper:
Raymond James Tax Credit Fund XX L.L.C.
c/o Raymond James Affordable Housing Investments, Inc.
880 Carillon Parkway
St. Petersburg, FL 33716
Attention: Steven J. Kropf, President
And with a copy to:
Nixon Peabody LLP
Exchange Place
53 State Street
Boston, MA 02109
Attention: Nate Bernard, Esq.
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g. This Agreement shall be interpreted and construed according to the laws of the State of
Minnesota. All litigation regarding this Agreement shall be venued in the appropriate state
or federal district court in Hennepin County, Minnesota.
h. Neither party may assign or transfer its rights and obligations under this Agreement without
the prior consent of the other party, provided that such party’s assignee or transferee
assumes all obligations under this Agreement and the other party consents to the
assignment in writing. Said agreement to assignment shall not unreasonably be withheld by
the consenting party. The Sub-Grantee may, with the Grantee’s prior consent, assign and
transfer its rights and obligations under this Agreement to a subsequent affiliated owner of
a particular portion or lot of the Property (“Permitted Successor(s) and/or Assign(s)”),
provided that reasonable prior notice thereof is provided to Grantee and further provided
that each such Permitted Successor(s) and/or Assign(s) agrees to assume the Agreement
with respect to such portion or lot of the Property.
8. Relationship. It is agreed that nothing contained in this Agreement is intended or should be
construed as creating the relationship of agents, partners, joint venturers, or associates between the parties
hereto or as constituting the Sub-Grantee as the employee of the Grantee for any purpose or in any manner
whatsoever. The Sub-Grantee is an independent contractor and neither it, nor its employees, agents, or
representatives are employees of the Grantee.
9. MGDPA. All data collected, created, received, maintained or disseminated for any purpose
in the course of the Sub-Grantee’s performance of this Agreement is governed by the Minnesota Government
Data Practices Act, Minnesota Statutes Chapter 13, and any other applicable state statutes, any state rules
adopted to implement the Act and statutes, as well as federal statutes and regulations on data privacy.
10. Copyrights. The Sub-Grantee certifies that it: (a) is the owner of any renderings, images,
perspectives, sections, diagrams, photographs or other copyrightable materials (collectively
“copyrightable materials”) that are in the grant application or submitted to the Grantee as part of the
grant application process or that the Sub-Grantee is fully authorized to grant permissions regarding the
copyrightable materials; and (b) the copyrightable materials do not infringe upon the copyrights of others.
The Sub-Grantee agrees that the Grantee and the Metropolitan Council have a non-exclusive royalty-free
license and all necessary permissions to reproduce and publish the copyrightable materials for
noncommercial purposes, including but not limited to press releases, presentations, reports and on the
Internet. The Sub-Grantee also agrees that it will not hold the Grantee or the Metropolitan Council
responsible for the unauthorized use of the copyrightable materials by third parties.
11. Restrictions on Loans or Grants by Sub-Grantee. The Sub-Grantee shall not use the grant
proceeds for loans or grants to any subrecipient at any tier unless the Sub-Grantee obtains the prior
written consent of the Metropolitan Council. [The Sub-Grantee has received prior written consent from
the Metropolitan Council to provide a $220,000 loan from the grant funds to the Affordable Housing
Redeveloper to be used solely for the authorized uses set forth in Section 2.03 of the Grant Agreement.]
12. Business Subsidy Law. The Sub-Grantee must comply, if appropriate and applicable, with
any “business subsidy” requirements of Minnesota Statutes Sections 116J.993 to 116J.995 that apply to
the Sub-Grantee’s expenditures or uses of the grant funds. The $220,000 loan to the Affordable Housing
Redeveloper is not subject to the Business Subsidy Law.
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13. Expiration and Termination. This Agreement shall automatically expire upon the
expiration or termination of the Grant Agreement or upon the satisfactory completion of all obligations
hereunder, whichever occurs first (the “Expiration Date”), except that the obligations contained in
subsections 3(g), 3(h), and 3(i) shall survive any such expiration. This Agreement may be terminated by
the Grantee for cause at any time upon 14 calendar days’ written notice to the Sub-Grantee. “For cause”
shall mean a material breach of this Agreement and any amendments to this Agreement. If this
Agreement is terminated prior to the Expiration Date, the Sub-Grantee shall receive payment on a pro
rata basis for eligible Activities that have been completed prior to the termination. Termination of this
Agreement does not alter the Grantee or the Metropolitan Council’s authority to recover grant funds on
the basis of a later audit or other review, and does not alter the Sub-Grantee’s obligation to return any
grant funds due to the Grantee or the Metropolitan Council as a result of later audits or corrections. If
the Grantee or the Metropolitan Council determines that the Sub-Grantee has failed to comply with the
terms and conditions of this Agreement, the Grant Agreement, or the applicable provisions of the
Metropolitan Livable Communities Act, the Grantee may take any action to protect the Grantee or the
Metropolitan Council’s interests and may refuse to disburse additional grant funds and may require the
Sub-Grantee to return all or part of the grant funds already disbursed.
14. Effect of Grant. Issuance of this grant neither implies any Grantee or Metropolitan
Council responsibility for the condition of the Property nor imposes any obligation on the Grantee or the
Metropolitan Council to participate in any activities on the Property. By awarding grant funds to the Sub-
Grantee for the Activities and executing this Agreement, the Grantee and the Metropolitan Council
assume no responsibility for (a) any damage to persons, property, or the environment caused by
implementation of the Activities; or (b) determining whether intended uses of the Property identified in
the grant application or potential future uses of the Property, including any residential uses, are suitable
for the Property.
[signatures to follow]
11
HP145-47-816298.v5
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of September __,
2022.
CITY OF HOPKINS
By: ____________________________
Patrick Hanlon
Its: Mayor
By: ____________________________
Michael Mornson
Its: City Manager
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HP145-47-816298.v5
ALATUS HOPKINS MD LLC, a Delaware limited liability company
By: _________________________________
Christian B. Osmundson
Its: Vice President
A-1
HP145-47-816298.v5
EXHIBIT A
GRANT AGREEMENT
[to be attached]
B-1
HP145-47-816298.v5
EXHIBIT B
LEGAL DESCRIPTION OF THE PROPERTY
[insert platted property (other than affordable housing property]
C-1
HP145-47-816298.v5
EXHIBIT C
AFFORDABLE HOUSING REDEVELOPER PROPERTY
Real property in the City of Hopkins, County of Hennepin, State of Minnesota, described as follows:
Lot 2, Block 2, Mile 14 On Minnehaha Creek, according to the recorded plat thereof, Hennepin County,
Minnesota.
Torrens Property.
LOAN AGREEMENT
THIS LOAN AGREEMENT (the “Agreement”) is made and entered into this ___ day of
September, 2022 (the “Effective Date”), between the CITY OF HOPKINS, MINNESOTA, a
municipal corporation of the State of Minnesota (the “City”), and ALATUS HOPKINS LIHTC I
LLC, a Minnesota limited liability company (the “Borrower”), which is an affiliate of Alatus
Hopkins MD LLC, a Delaware limited liability company (the “Redeveloper”).
WITNESSETH:
WHEREAS, pursuant to the terms of a Contract for Private Redevelopment of even date
herewith (the “Contract”) between the City, the Housing and Redevelopment Authority in and for
the City of Hopkins (the “Authority”), and the Redeveloper, subject to the terms of the Partial
Assignment and Assumption Agreement of even date herewith between the City, the Authority,
the Redeveloper, and the Borrower, the Redeveloper has acquired and intends to redevelop or
cause to be redeveloped the property located at 325 Blake Road in the City and legally described
in Exhibit A attached to the Contract (the “Redevelopment Property”) and construct multiple
buildings containing approximately 800 multifamily units, with 688 rental apartment units and 112
senior cooperative units, meeting certain affordability levels within each building, approximately
33 for sale town homes, 8,000 square feet of ground-floor retail, a 1,000-square foot sky lounge,
and two 4,500-square foot standalone restaurant pads (the “Project”); and
WHEREAS, to assist with the costs of the Project, the City, on behalf of the Redeveloper,
applied for and received a Livable Communities Demonstration Account (LCDA) grant in the total
sum of $1,250,000 (the “LCDA Grant”) from Metropolitan Council (the “Council”); and
WHEREAS, on January 26, 2022, the Council and the City entered into a Metropolitan
Livable Communities Act Grant Agreement, with an expiration date of December 31, 2024 (the
“Grant Agreement”), which is attached hereto as EXHIBIT B; and
WHEREAS, the proceeds of the LCDA Grant may be used for eligible project activities of
the Project to be constructed on the Redevelopment Property and surrounding related projects, as
set forth in EXHIBIT A attached hereto and as further described in the Grant Agreement (the
“Grant-Eligible Activities”), which amounts may be reallocated pursuant to Section 2.09 of the
Grant Agreement; and
WHEREAS, the City desires to loan a portion of the proceeds of the LCDA Grant in the
principal amount of $220,000 to the Borrower (the “Loan”) to provide financing for a portion of
the Grant-Eligible Activities with respect to the construction of the “Phase IA, Building A” (as
described in the Contract) portion of the Project on the portion of the Redevelopment Property
legally described in EXHIBIT D attached hereto (the “Phase IA, Building A Property”) containing
approximately 116 multi-family units, with affordable levels within Building A as set forth in the
Contract (the “Phase IA, Building A Minimum Improvements”); and
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WHEREAS, the City desires to make a grant of the remainder of the proceeds of the LCDA
Grant in the principal amount of $1,030,000 to the Redeveloper, the terms of which are not
included in this Agreement; and
WHEREAS, the City believes that the development of the Phase IA, Building A Minimum
Improvements, and fulfillment generally of this Agreement, are in the vital and best interests of
the City and the health, safety, morals, and welfare of its residents, and in accord with the public
purposes and provisions of the applicable State of Minnesota and local laws and requirements
under which the Phase IA, Building A Minimum Improvements has been undertaken and is being
assisted; and
WHEREAS, the City and the Borrower desire to enter into this Agreement for the purpose
of setting forth their respective responsibilities with respect to the Loan; 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:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following meaning:
Borrower Documents: any and all documents and instruments in connection with the
Phase IA, Building A Minimum Improvements as reasonably requested by the City.
Disbursement Request Form: the form, substantially in the form attached hereto as
EXHIBIT C, to be submitted to the City when a disbursement of the Loan is requested and which
is referred to in Article VI hereof, together with such other request forms as may be reasonably
required from the Council and the City.
Grant-Eligible Activities: the activities on the Redevelopment Property and the Phase IA,
Building A Property funded in full or in part by the LCDA Grant, as set forth in EXHIBIT A and
set forth in the Grant Agreement.
Loan: the sum of $220,000.00 to be loaned by the City to the Borrower under this
Agreement.
Loan Documents: collectively, this Agreement, the Mortgage, and the Note.
Mortgage: the Combination Mortgage and Security Agreement of even date herewith from
the Borrower to the City securing repayment of the Note in the form approved by the City.
Note: the Note of even date herewith from the Borrower to the City in the amount of the
Loan evidencing Borrower’s obligation to repay the Loan in the form approved by the City.
3
Phase IA, Building A Minimum Improvements: has the meaning set forth in the recitals
above.
Phase IA, Building A Property: the portion of the Redevelopment Property legally
described in EXHIBIT D attached hereto.
Plans and Specifications: the final plans and specifications for the construction and
installation of the Grant-Eligible Activities.
Project: has the meaning set forth in the first recital above.
Project Costs: the costs of the Grant-Eligible Activities eligible to be reimbursed with the
proceeds of the LCDA Grant under the Grant Agreement and as authorized by law.
Redevelopment Property: the property legally described in Exhibit A of the Contract.
ARTICLE II
TERM OF AGREEMENT
This Agreement shall take effect and be in force from and after the Effective Date, and
shall remain in effect until the Borrower has performed all of its obligations under this Agreement,
the Loan Documents, and the Grant Agreement, unless earlier terminated as provided in this
Agreement or the Grant Agreement.
ARTICLE III
THE LOAN
Subject to the terms and conditions of this Agreement, the City will make the Loan to the
Borrower to be used for payment of Project Costs with respect to the Phase IA, Building A
Minimum Improvements, which Loan shall be disbursed pursuant to this Agreement. In
consideration for the Loan, the Borrower agrees to perform all of their obligations under this
Agreement. The Loan shall be evidenced by the Note payable by the Borrower to the Lender which
shall be dated as of the date of closing on the Loan (the “Loan Closing Date”). Proceeds of the Loan
shall be disbursed in accordance with Articles V and VI hereof.
ARTICLE IV
STATEMENT OF WORK
Proceeds of the Loan may be used to construct any of the improvements described on
EXHIBIT A at the Phase IA, Building A Property in accordance with the terms set forth herein,
and the Borrower shall construct all such improvements. In accordance with the Grant Agreement,
the Borrower will commence construction of the Grant-Eligible Activities and pay the Project
Costs prior to December 31, 2024. If the Borrower finds it necessary to request an extension of
the Grant Agreement from the Metropolitan Council, it must notify the City and follow the
requirements set forth in Section 5.03 of the Grant Agreement.
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ARTICLE V
CONDITIONS OF DISBURSEMENT
The obligation of the City to make or cause to be made disbursements of the proceeds of
the Loan pursuant to Article VI hereof shall be subject to the conditions precedent that it shall have
received on or before the date of the disbursement hereunder the following:
a. the Borrower Documents, the Mortgage, and the Note, duly executed and
delivered by the Borrower;
b. evidence satisfactory to the City that the Grant-Eligible Activities and the
construction and contemplated use thereof are permitted by and comply in all material
respects with all applicable restrictions and requirements in prior conveyances, zoning
ordinances, subdivision and platting requirements and other laws and regulations;
c. all other conditions specified in the authorizing City resolution and the
Grant Agreement shall have been duly satisfied by the Borrower or waived in writing by
the City or the Council, as applicable;
d. no uncured Event of Default (as defined in Article VIII hereof), and no event
which with the giving of notice or the lapse of time or both would constitute an Event of
Default, shall have occurred and be continuing and all representations and warranties made
by the Borrower in Article VII hereof shall continue to be true and correct as of the date of
such disbursement;
e. if required by the City, the City shall have been furnished with a statement
of the Borrower and of any contractor, in form and substance acceptable to the City, setting
forth the names, addresses and amounts due or to become due as well as the amounts
previously paid to every contractor, subcontractor, person, firm or corporation furnishing
materials or performing labor in connection with the construction of any part of the
Grant-Eligible Activities; and
f. the Borrower shall have provided to the City such documentation and
information reasonably necessary to evidence its compliance with all of the provisions of
this Agreement, including without limitation the provisions of the Grant Agreement
applicable to the Borrower, as the City may reasonably request.
ARTICLE VI
REQUESTS FOR DISBURSEMENT
6.01. Disbursement. The City and the Borrower agree that, on the terms and subject to the
conditions hereinafter set forth and the conditions set forth in the Grant Agreement, including the
reallocation of Project Costs among the Grant-Eligible Activities pursuant to Section 2.09 of the
Grant Agreement, the Loan shall be disbursed from the City to the Borrower, or the Borrower’s
agent or designee, in disbursements, with the last disbursement being made upon one hundred
percent (100%) completion of the Grant-Eligible Activities. Disbursements of the Loan shall not
5
be made more often than monthly. Notwithstanding anything to the contrary contained herein, the
City shall only be obligated to make the disbursements hereunder to pay Project Costs related to
the Phase IA, Building A Minimum Improvements in an amount up to or equal to the lesser of the
amount of the Loan or the amount actually disbursed by the Council to the City under the Grant
Agreement and such obligation is further subject to the conditions of Article V hereof.
6.02. Disbursement Request.
a. When the Borrower desires to obtain a disbursement of the Loan, the
Borrower shall submit to the City the Disbursement Request Form, together with any
additional documents required by the City or the Council, duly signed by the Borrower.
The Disbursement Request Form shall be submitted by the Borrower at least
forty-five (45) days prior to the date of the requested disbursement. The Disbursement
Request Form shall constitute a representation and warranty by the Borrower to the City
that all representations and warranties of the Borrower set forth in the Borrower Documents
are true and correct as of the date of such Disbursement Request Form, except for such
representations and warranties which, by their nature, would not be applicable as of the
date of such Disbursement Request.
b. At the time of submission of the Disbursement Request Form, the Borrower
shall also submit the following to the City:
1. a written lien waiver from the general contractor for work done and
materials supplied by it which were paid or a conditional lien waiver from the
general contractor for work done and materials supplied by it which are to be paid
pursuant to the current Disbursement Request Form and from each subcontractor
for work done and materials supplied by it which were paid or are to be paid for
pursuant to the prior Disbursement Request Form;
2. evidence satisfactory to the City that the Grant-Eligible Activities
completed as of the date of the Disbursement Request Form have been constructed
in accordance with the Plans and Specifications in all material respects;
3. an executed Sworn Construction Statement, in form and substance
acceptable to such parties, signed by the Borrower showing all costs and expenses
of any kind theretofore actually paid or incurred in constructing the Grant-Eligible
Activities; and
4. a certified statement of the Borrower reflecting the use to which the
proceeds of the Loan have been applied in addition to those uses reflected in the
Sworn Construction Statement referred to in clause (b)(3) above.
c. Upon receipt of the Disbursement Request Form, if the City has determined
that all the conditions set forth in Articles V and VI hereof have been satisfied, a request for
disbursement shall be submitted to the Council. The adequacy of the request for disbursement
6
shall be determined by the City and the Council in their sole discretion. After submission of
the Disbursement Request Form, if the Borrower has performed all of its agreements and
complied with all requirements to be performed or complied with under this Agreement and
the Grant Agreement, including satisfaction of all applicable conditions precedent contained
in Article V hereof, the City shall make a disbursement to the Borrower, or the Borrower’s
agent or designee, in the amount of the requested disbursement or such lesser amount as shall
be approved, within forty-five (45) days after the date of the City’s receipt of the Disbursement
Request Form, or, if later, upon receipt of grant proceeds from the Council. Each
disbursement shall be paid from the proceeds of the LCDA Grant, subject to the City’s and
the Council’s determination that the relevant Project Cost is payable from the LCDA Grant
under the Grant Agreement. The City is under no obligation to disburse any proceeds of the
Loan until it receives a disbursement of the LCDA Grant from the Council. Notwithstanding
anything to the contrary herein, if the Project Costs of the Grant-Eligible Activities Phase IA,
Building A Minimum Improvements exceeds the amount to be reimbursed under this
Agreement, such excess shall be the sole responsibility of the Borrower.
ARTICLE VII
BORROWER’S COVENANTS, REPRESENTATIONS, WARRANTIES AND
AGREEMENTS
The Borrower covenants, represents, warrants and agrees that:
a. The Borrower is a limited liability company duly organized and validly
existing under the laws of the State of Minnesota, is duly authorized to operate in the State
of Minnesota, has the power to enter into and execute this Agreement and by appropriate
action has authorized the execution and delivery of this Agreement.
b. The Borrower Documents will not result in any breach of or constitute a
default under any other mortgage, lease, loan, grant or credit agreement, organizational
documents, or other instrument to which the Borrower is a party or by which it may be
bound or affected.
c. The Loan Documents will constitute valid, legal and binding obligations of
the Borrower enforceable against the Borrower.
d. The Borrower has or will have all necessary approvals, licenses and permits
required for construction and operation of the Phase IA, Building A Minimum
Improvements except those which cannot be obtained until completion of the
Grant-Eligible Activities or the Phase IA, Building A Minimum Improvements, as the case
may be.
e. The Borrower shall permit the City, upon reasonable notice, to examine all
books, records, contracts, plans, permits, bills and statements of account pertaining to the
Grant-Eligible Activities and to make copies as the City may require.
7
f. The Borrower shall obey and comply with all federal, state and local laws,
rules and regulations in connection with the Phase IA, Building A Minimum
Improvements.
g. The City’s actions in approving the Loan shall not be construed as an
approval by the City of providing any additional funds for the Phase IA, Building A
Minimum Improvements or other improvements to the Phase IA, Building A Property.
h. The Borrower agrees to pay for all of the costs incurred to construct the
Grant-Eligible Activities including any cost overruns. There are no public funds for the
Grant-Eligible Activities except for the Loan.
ARTICLE VIII
DEFAULT
Any one or more of the following shall constitute an event of default (an “Event of
Default”) under this Agreement:
a. The Borrower shall herein default in the performance or observance of any
agreement, covenant or condition required to be performed or observed by the Borrower
under the terms of this Agreement or the Grant Agreement, to the extent such obligations
exist, and such default shall not be remedied within sixty (60) days after written notice to
the Borrower from the City specifying such default.
b. The Borrower shall be in default of any term of any other agreement relating
to the Grant-Eligible Activities which is not cured within sixty (60) days after written notice
from the City or if the default cannot be cured within sixty (60) days within such reasonable
time as is required to cure the default, provided that the Borrower is diligently pursuing a
cure.
c. Any representation or warranty made by the Borrower herein or any
document or certificate furnished to the City shall prove at any time to be incorrect or
misleading as of the date made.
d. The Borrower engages in any illegal activities.
e. The Borrower uses any of the Loan funds contrary to this Agreement or the
Grant Agreement which is not cured within sixty (60) days after written notice from the
City.
f. The Borrower shall fail to obtain and/or keep in force insurance only of the
types and in the amounts as specified within this Agreement, or shall fail to indemnify and
hold harmless the City as set forth herein which is not cured within ten (10) business days
after written notice from the City.
g. The failure to repay any principal of the Loan when due.
8
A default by the Redeveloper under the Sub-Grant Agreement will not cause a cross
default under this Agreement.
The Borrower’s investor member, Raymond James Tax Credit Fund XX L.L.C. (together
with its permitted successors and/or assigns, the “Investor Member”), shall have an opportunity,
but not an obligation, to cure any Events of Default or defaults under this Agreement and under
any of the other Loan Documents, and any such cure shall be accepted by the City as if cured by
the Borrower itself. This Article VIII, the other provisions of this Agreement, and the other Loan
Documents shall also be subject to Sections 28 and 29 of the Mortgage.
ARTICLE IX
REMEDIES
Whenever any Event of Default shall have happened and is continuing beyond any
applicable cure period any one or more of the following remedial steps may be taken by the City:
a. The City may terminate this Agreement;
b. The City may suspend or terminate any further disbursements to be made
under this Agreement;
c. The City may suspend its performance under this Agreement during the
continuance of the Event of Default; and/or
d. The City may take whatever action at law or in equity may be necessary or
appropriate to seek repayment or reimbursement of the Loan funds disbursed to the
Borrower, to enforce performance and observance of any obligation, agreement, covenant,
representation or warranty of the Borrower under this Agreement, or any related
instrument; or to otherwise compensate the City for any damages on account of such Event
of Default.
No remedy 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
Event of Default shall impair any such right or power, nor shall be construed to be a waiver thereof,
but any such right and power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the City to exercise any remedy reserved to it in this Article, it shall
not be necessary to give any notice, other than such notice as may be herein expressly required or
be required by law.
ARTICLE X
ADDITIONAL PROVISIONS
a. Indemnity, Hold Harmless. The Borrower shall and does hereby agree to
indemnify against and to hold City, and its officers, councilmembers, agents, and
9
employees including the independent contractors, consultants and legal counsel, servants
and employees thereof (hereinafter, for purposes of this section, collectively the
“Indemnified Parties”), harmless of and from any and all liability, loss, or damage that it
may incur under or by reason of this Agreement and 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 Grant-Eligible Activities, and of and from any and all claims and demands
whatsoever that may be asserted against City by reason of any alleged obligations or
undertakings on the Borrower’s part to perform or discharge any of the terms, covenants,
or agreements contained herein.
Except for any willful misrepresentation or any willful, wanton, or grossly
negligent misconduct of the Indemnified Parties, the Borrower agrees 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 under this Agreement, the Grant Agreement or the transactions
contemplated hereby or the acquisition, construction, installation, ownership, and
operation of the Project or the Grant-Eligible Activities.
This indemnification and hold harmless provision shall survive the execution,
delivery, and performance of this Agreement and the creation and repayment of any
indebtedness to City under this Agreement.
b. Independent Contractor. For the purpose of this Agreement, the Borrower
shall be deemed an independent contractor and not an employee or agent of the City. Any
and all employees or agents of the Borrower shall not be considered employees or agents
of the City.
c. Compliance With Minnesota Laws. All of the data created, collected,
received, stored, used, maintained or disseminated by the Borrower with respect to the
Grant-Eligible Activities are subject to the requirements of Minnesota Statutes, Chapter 13,
and, except as provided in Minnesota Statutes, Section 13.05, subdivision 11(b), the
Borrower agrees to comply with those requirements under Minnesota Statutes, Chapter 13,
to the extent applicable. The remedies in Minnesota Statutes, Section 13.08 may apply to
the Borrower. If any provision of this Agreement is in conflict with the Minnesota
Government Data Practices Act or other Minnesota State laws, state law shall control. The
Borrower shall comply with the conflict of interest provisions of Minnesota Statutes,
Sections 471.87 through 471.88.
d. Contractor and Subcontractor Compliance. The Borrower shall comply
with and shall cause all contractors and subcontractors to comply with all applicable state
and federal laws, and to the extent applicable to the Borrower, the Grant Agreement. The
Borrower shall require all contractors and subcontractors performing work covered by the
Loan to obtain all required permits, licenses and certifications and comply with all
applicable state and federal Occupational Safety and Health Act regulations.
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e. Site Compliance. The Borrower shall meet or require to be met all
applicable requirements of:
(1) Federal and state laws relating to stormwater discharges including, without
limitation, any applicable requirements of Code of Federal Regulations, title 40, parts 122
and 123; and
(2) The Council’s 2030 Water Resources Management Policy Plan and the
local water management plan for the jurisdiction within which the Phase IA, Building A
Property is located.
f. Fair Housing Compliance. The Borrower shall comply in all respects with
the affordability and fair housing marketing plan requirements set forth in Article 3 of the
Grant Agreement.
ARTICLE XI
INSURANCE
With respect to the Phase IA, Building A Minimum Improvements, the Borrower shall
maintain all insurance required by Section 5.1 of the Contract.
ARTICLE XII
RECORDS AND REPORTS
Upon request, the Borrower shall submit to the City a full account of the status of the
activities undertaken as part of this Agreement. The following records shall be maintained by the
Borrower, copies of which shall be submitted in such form as City staff may prescribe:
a. All receipts and invoices relating to expenditure of Loan funds.
b. Records shall be sufficient to reflect all costs incurred in performance of the
Loan. The books, records, documents, and accounting procedures, relevant to the Loan
shall be subject to examination by the City, the Council and state agencies and the
legislative auditor.
ARTICLE XIII
AMENDMENT
This Agreement shall not be amended or modified without the prior written approval of the
City and the Borrower.
ARTICLE XIV
INCORPORATION OF GRANT AGREEMENT
The Borrower acknowledges and agrees that all terms, conditions and obligations
contained in the Grant Agreement are incorporated herein, and made a part of this Agreement. In
11
addition to the terms, conditions and obligations described herein, the Borrower further
acknowledges, accepts and assumes all of the City’s obligations described in the Grant Agreement,
unless such obligations can only be reasonably performed by the City, including but not limited
to, the obligation to repay the LCDA Grant if required by the Council. For purposes of enforcing
this Agreement, the Borrower acknowledges, accepts and agrees that the City shall inure to, and
possess the rights and authority of the Council as described in the Grant Agreement.
ARTICLE XV
MISCELLANEOUS
a. Notices. All notices provided for herein shall be in writing and shall be
deemed to have been given when delivered personally or when deposited in the United
States mail, registered or certified, postage prepaid, addressed as follows:
If to the Borrower: Alatus Hopkins LIHTC I LLC
c/o Alatus LLC
80 South Eighth Street, Suite 4155
Minneapolis, MN 55402
Attn: Robert C. Lux and Chris Osmundson
With a copy to: Winthrop & Weinstine, P.A.
225 South Sixth Street, Suite 3500
Minneapolis, MN 55402
Attention: John M. Stern
With a copy to
Investor Member: Raymond James Tax Credit Fund XX L.L.C.
c/o Raymond James Affordable Housing Investments, Inc.
880 Carillon Parkway
St. Petersburg, FL 33716
Attention: Steven J. Kropf, President
And with a copy to: Nixon Peabody LLP
Exchange Place
53 State Street
Boston, MA 02109
Attention: Nate Bernard, Esq.
If to the City: City of Hopkins, Minnesota
1010 First Street South
Hopkins, MN 55343
Attn: City Manager
or addressed to any such party at such other address as such party shall hereafter
furnish by notice to the other parties as above provided.
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b. Binding Effect; Waiver. The provisions of this Agreement shall inure to the
benefit of and be binding upon the Borrower and the City and their respective successors
and assigns. No delay on the part of the City in exercising any right, power or privilege
shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege constitute such waiver nor exhaust the same, which shall be continuing. The
rights and remedies of the City specified in this Agreement shall be in addition to and not
exclusive of any other right and remedies which the City, by operation of law, would
otherwise have.
c. Survival of Agreements, Representations and Warranties. All agreements,
representations and warranties made in this Agreement by the Borrower shall survive its
termination.
d. Governing Law. This Agreement and the attachments are to be construed
and enforced according to and governed by the laws of the State of Minnesota.
e. Counterparts, Electronic Signatures. This Agreement may be executed in
any number of counterparts, all of which shall constitute a single agreement, any one of
which bearing signatures of all parties shall be deemed an original. An electronic or
facsimile signature is deemed to be the same as an original signature.
f. Time. Time is of the essence in the performance of this Agreement.
g. Entire Agreement. This Agreement contains the entire agreement of the
parties hereto on the matters covered herein. No other agreement, statement or promise
made by any party or by any employee, officer or agent of any party hereto that is not in
writing and signed by all the parties to this Agreement shall be binding.
h. No Joint Venture. The relationship between the City and the Borrower is
solely that of grantor and grantee and the relationship by and between the City and the
Borrower is not, nor shall it be deemed to create, a partnership or joint venture in the
Phase IA, Building A Minimum Improvements.
i. Venue. All matters whether sounding in tort or in contract, relating to the
validity, construction, performance, or enforcement of this Agreement shall be controlled
by and determined in accordance with the laws of the State of Minnesota, and the Borrower
agrees that all legal actions initiated by the Borrower with respect to or arising from any
provision contained in this Agreement shall be initiated, filed and venued exclusively in
the State of Minnesota, Hennepin County, District Court.
j. Attorneys’ Fees and Expenses. In the event the Borrower should default
under any of the provisions of this Agreement and the City should employ attorneys or
incur other expenses for the collection of amounts due hereunder or the enforcement of
performance of any obligation or agreement on the part of the Borrower, the Borrower will
on demand pay to the City the reasonable fee of such attorneys and such other expenses so
incurred, but only in the event the City prevails in pursuing such claims.
13
k. Assignment. This Agreement may not be assigned by the Borrower without
the prior written consent of City, which consent shall be in the sole discretion of the City
S-1
IN WITNESS WHEREOF, the parties have caused this Loan Agreement to be executed
the day and year first above written.
ALATUS HOPKINS LIHTC I LLC, a Minnesota
limited liability company
By: Alatus Hopkins LIHTC I MM LLC, a
Minnesota limited liability company
Its: Managing Member
By:
Name: Christian B. Osmundson
Title: Vice President
B-1
Execution page of the City to the Loan Agreement, dated as of the date and year first written above.
CITY OF HOPKINS, MINNESOTA
By
Its Mayor
By
Its City Manager
A-1
EXHIBIT A
GRANT ELIGIBLE ACTIVITIES
Grant-Eligible Activities include those costs outlined in the Grant Agreement including:
$605,000 for Placemaking Spaces: landscaping
$395,000 for Placemaking Spaces: sidewalks/paths
$200,000 for Placemaking Spaces: seating, furnishings and wayfinding
$50,000 for Placemaking Spaces: public art
B-1
EXHIBIT B
GRANT AGREEMENT
C-1
EXHIBIT C
DISBURSEMENT REQUEST FORM
City of Hopkins, Minnesota
1010 First Street South
Hopkins, MN 55343
Attn: City Manager
The undersigned, Alatus Hopkins LIHTC I1 LLC, a Minnesota limited liability company
(the “Borrower”), pursuant to that certain Loan Agreement, dated as September 1, 2022 (the “Loan
Agreement”), between the City of Hopkins, Minnesota (the “City”), and the Borrower, hereby
requests payment of the expenses listed on the attached Expense Listing.
The total amount to be disbursed for this draw is $_________________.
In connection with this draw, the undersigned hereby represents as follows:
a. each obligation listed in the attached Exhibit II has been incurred and is a
Project Cost related to the Grant-Eligible Activities,
b. no license or permit necessary for construction of the Grant-Eligible
Activities previously issued has been revoked or the issuance thereof
subjected to challenge before any court of other governmental authority
having or asserting jurisdiction thereover;
c. no event has occurred and is continuing which, but for the giving of notice,
the expiration of any cure period, or both, would constitute an event of
default under the Loan Agreement or the Grant Agreement;
d. all funds of the Borrower’s match, if any, have been fully disbursed for the
payment of Project Costs; and
e. ______% of the Grant-Eligible Activities have been completed.
ALATUS HOPKINS LIHTC I LLC,
a Minnesota limited liability company
By: Alatus Hopkins LIHTC I MM LLC,
a Minnesota limited liability company
Its: Managing Member
By: ____________________________
Name: Christian B. Osmundson
Its: Vice President
Approved:
CITY OF HOPKINS, MINNESOTA
By
Its City Manager
C-2
Exhibit II
Expense Listing
Expense Description Amount
D-1
EXHIBIT D
LEGAL DESCRIPTION
Real property in the City of Hopkins, County of Hennepin, State of Minnesota, described as
follows:
Lot 2, Block 2, Mile 14 On Minnehaha Creek, according to the recorded plat thereof, Hennepin
County, Minnesota.
Torrens Property.
HP145-47 (JAE)
822039v2
COMBINATION MORTGAGE AND SECURITY AGREEMENT
THIS MORTGAGE SECURES A LOAN MADE UNDER AN AFFORDABLE HOUSING
PROGRAM BY A STATE OR LOCAL GOVERNMENT AGENCY, AND AS SUCH IS
EXEMPT FROM MORTGAGE REGISTRATION TAX PURSUANT TO MINNESOTA
STATUTES, SECTION 287.04(6).
THIS COMBINATION MORTGAGE AND SECURITY AGREEMENT (hereinafter
referred to as the “Mortgage”) is made and given as of the ___ day of September, 2022, by
ALATUS HOPKINS LIHTC I LLC, a Minnesota limited liability company (the “Mortgagor”), in
favor of the CITY OF HOPKINS, MINNESOTA, a municipal corporation of the State of
Minnesota (hereinafter designated as “Mortgagee”).
RECITALS:
WHEREAS, the Mortgagor hereby mortgages and conveys to the Mortgagee the real
property and improvements situated in the County of Hennepin, State of Minnesota, and legally
described on EXHIBIT A attached hereto and made a part hereof, the leases and rents with respect
to the real property and improvements and all personal property and equipment, and all products
and proceeds thereof owned by Mortgagor and used in the operation of the Phase IA, Building A
Minimum Improvements (as defined in the hereinafter-described Loan Agreement) (herein,
collectively the “Property”); and
WHEREAS, this Mortgage, together with the Loan Agreement of even date herewith (the
“Loan Agreement”) between the Mortgagor and the Mortgagee and all other documents securing
the Loan as defined below (collectively, the “Loan Documents”) are given in consideration of and
as security for the payment of Two Hundred Twenty Thousand and No/100 Dollars ($220,000.00)
(the “Loan”), receipt of which is hereby acknowledged and which is made to enable the Mortgagor
to complete the Grant-Eligible Activities (as defined in the Loan Agreement). The Loan is
evidenced by a Note (the “Note”) in the amount of Two Hundred Twenty Thousand and No/100
Dollars ($220,000.00) executed by the Mortgagor, to the order of the Mortgagee, of even date
herewith. The unpaid principal sum shall be due and payable by the Mortgagor in full on January
1, 2065 unless forgiven in accordance with the Note (the “Maturity Date”).
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AGREEMENTS:
NOW, THEREFORE, to secure (a) the due and punctual payment of principal on the Note
and the obligations of the Mortgagor under the Loan Agreement and all renewals, extensions and
modifications thereof any agreements or obligations issued in substitution therefore (provided the
principal amount secured by this Mortgage shall not exceed $220,000.00) and (b) the performance
of all the covenants and agreements of the Mortgagor herein, in the Loan Agreement and in any
other agreement now or hereafter entered into between the Mortgagor and Mortgagee in
connection with the Loan Agreement or the Grant-Eligible Activities contemplated therein (the
payment and other obligations evidenced by the Loan Agreement, this Mortgage and all such other
agreements are hereinafter collectively referred to as the “Indebtedness”), the Mortgagor does
hereby mortgage, grant, bargain, sell, assign, transfer and convey unto the Mortgagee forever, with
power of sale the following:
I.
All of the Mortgagor’s right, title and interest in and to the Property and the buildings,
structures, other improvements, fixtures and personal property now standing or at any time
hereafter constructed or placed upon the Property (the “Improvements”), including but not limited
to (i) all building materials, supplies and equipment now or hereafter located on the Property and
suitable or intended to be incorporated in any Improvements located or to be erected on the
Property; (ii) all heating, plumbing and lighting apparatus, motors, engines and machinery,
electrical equipment, incinerator apparatus, air-conditioning equipment, water and gas apparatus,
pipes, faucets, and all other fixtures of every description which are now or may hereafter be placed
or used upon the Property or in any of the Improvements now or hereinafter located thereon;
(iii) all additions, accessions, increases, parts, fittings, accessories, replacements, substitutions,
betterments, repairs and proceeds to and of any and all of the foregoing; (iv) all hereditaments,
easements, appurtenances; estates, and other rights and interests now or hereafter belonging to or
in any way pertaining to the Property or to any of the Improvements now or hereafter located
thereof; and (v) all tangible personal property owned by the Mortgagor and now or at any time
hereafter located on or relating to the Property.
II.
All rents, issues, profits, condemnation awards, revenues and income arising from the
ownership, operation or sale of the Property and the Improvements and all proceeds and products
thereof (herein collectively called “Revenues and Income”).
To Have and To Hold the Property and the Improvements (together, the “Mortgaged
Property”), and the Revenues and Income unto the Mortgagee forever; provided, nevertheless, that
this Mortgage is granted upon the express condition that if the Mortgagor shall cause to be paid to
the Mortgagee as and when due and payable the Indebtedness, and shall also keep and perform
each and every covenant and agreement of the Mortgagor herein contained, then this Mortgage
and the estate hereby granted shall cease and be and become void and shall be released of record
at the expense of the Mortgagor; otherwise this Mortgage shall be and remain in full force and
effect.
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The Mortgagor represents, warrants and covenants to and with the Mortgagee that
Mortgagor is lawfully seized of the Property and has good right and full power and authority to
execute this Mortgage and to mortgage the Mortgaged Property; that the Mortgagor owns the
Mortgaged Property free from all liens; security interests and encumbrances except as agreed to
by the Mortgagee; that the Mortgagor will warrant and defend the title to the Mortgaged Property
and the lien and priority of this Mortgage against all claims and demands of all persons
whomsoever, whether now existing or hereafter arising, except (i) as agreed to by the Mortgagee,
(ii) listed on Exhibit B attached hereto and made a part hereof, (iii) the development documents
that must be recorded, including the Contract for Private Development, the Partial Assignment and
Assumption Agreement, the Declaration of Restrictive Covenants, the Minimum Assessment
Agreement, the Master Subordination Agreement, the LCDA Mortgage, and the HRA Loan
Mortgage, and (iv) the regulatory agreement or land use restriction agreement to be entered into
relating to low-income housing tax credits (collectively, the “Permitted Encumbrances”). The
covenants and warranties of this paragraph shall survive foreclosure of this Mortgage and shall run
with the Property.
The Mortgagor further covenants and agrees as follows:
1. Payment of the Indebtedness and Compliance with Other Agreements.
(a) The Mortgagor will cause the principal on the Indebtedness to be duly and
punctually paid in accordance with the terms of the Note, the Loan Agreement and this
Mortgage, when and as due and payable. The provisions of the Note and Loan Agreement
are hereby incorporated by reference into this Mortgage as fully as if set forth at length
herein.
(b) Mortgagor will duly and punctually perform each and every obligation
under the Loan Agreement and any other agreement on or hereafter entered into by the
Mortgagor and Mortgagee in connection with the Loan Agreement or the Grant-Eligible
Activities contemplated therein.
2. Payment of Taxes, Assessments and Other Charges; Escrow. Subject to
paragraph 6 relating to contests, the Mortgagor shall pay before a penalty might attach for
nonpayment thereof, all taxes and assessments and all other charges whatsoever levied upon or
assessed or placed against the Mortgaged Property, except that assessments may be paid in
installments so long as no fine or penalty is added to any installment for the nonpayment thereof.
The Mortgagor shall likewise pay all taxes, assessments and other charges, levied upon or assessed,
placed or made against, or measured by, this Mortgage, or the recordation hereof, or the
Indebtedness secured hereby, provided that the Mortgagor shall not be obliged to pay such tax,
assessment or charge if such payment would be contrary to law or would result in the payment of
an unlawful rate of interest on the Indebtedness secured hereby; and provided further that nothing
herein contained shall be construed as requiring the Mortgagor to pay any net income, profits or
revenues taxes of the Mortgagee. The Mortgagor shall promptly furnish to the Mortgagee all
notices received by the Mortgagor of amounts due under this paragraph and shall furnish receipts
evidencing such payments within ten (10) days after such payments are made.
4
3. Payment of Utility Charges. Subject to paragraph 6 relating to contests, the
Mortgagor shall pay all charges made by utility companies, whether public or private, for
electricity, gas, heat, water, or sewer, furnished or used in connection with the Mortgaged Property
or any part thereof, and will upon written request of the Mortgagee, furnish proper receipts
evidencing such payment.
4. Liens. Subject to paragraph 6 hereof relating to contests, the Mortgagor shall not
create, incur or suffer to exist any lien, encumbrance or charge on the Mortgaged Property or
Revenues and Income or any part thereof which may have priority over the lien hereof, other than
the lien of current real estate taxes and installments of special assessments with respect to which
no penalty is yet payable, and other than any lien granted in connection with the current financing
secured by the Property including without limitation all the various financing and loans described
in that certain Master Subordination Agreement dated as of even date herewith by and between
Mortgagor, Mortgagee, Housing and Redevelopment Authority in and for the Mortgagee,
Hennepin County Housing and Redevelopment Authority, and Alatus Hopkins MD LLC, a
Delaware limited liability company (“Master Subordination Agreement”) recorded or to be
recorded contemporaneously herewith, and Permitted Encumbrances. Subject to paragraph 6
relating to contests, the Mortgagor shall pay, when due, the claims of all persons supplying labor
or materials to or in connection with the Mortgaged Property.
5. Compliance with Laws. Subject to paragraph 6 relating to contests, the Mortgagor
shall comply with all present and future statutes, laws, rules, orders, regulations and ordinances
affecting the Mortgaged Property, any part thereof or the use thereof. The Mortgagor shall not use
or occupy nor permit the use and occupancy of the Property without a current Certificate of
Occupancy issued by the City of Hopkins, Minnesota.
6. Permitted Contests. The Mortgagor shall not be required to (i) pay any tax,
assessment or other charge referred to in paragraph 2 hereof, (ii) pay any charges referred to in
paragraph 3 hereof, (iii) discharge or remove any lien, encumbrance or charge referred to in
paragraph 4 hereof, or (iv) comply with any statute, law, rule, order, regulation or ordinance
referred to in paragraph 5 hereof, so long as the Mortgagor shall (a) contest, in good faith, the
existence, or the validity thereof, the amount of damages caused thereby or the extent of the
Mortgagor’s liability therefor, by appropriate proceedings which shall operate during the pendency
thereof to prevent (A) the collection of, or other realization upon the tax, assessment, charge or
lien, encumbrance or charge so contested, (B) the sale, forfeiture or loss of the Mortgaged Property
or any part thereof, and (C) any interference with the use or occupancy of the Mortgaged Property
or any part thereof, and (b) shall give such security to the Mortgagee as may be reasonably
demanded by the Mortgagee to insure compliance with the foregoing provisions of this
paragraph 6. Mortgagor shall give prompt written notice to Mortgagee of the commencement of
any contest referred to in this paragraph 6.
7. Insurance. The Mortgagor shall keep the improvements now existing or hereafter
erected on the Mortgaged Property insured against loss by fire and any other hazards for which the
Mortgagee requires insurance for full replacement value of the improvements. This insurance
shall be maintained only in the amounts and for the periods as required under the terms of the Loan
Agreement. If the Mortgagor fails to maintain coverage described above, the Mortgagee may, at
5
the Mortgagee’s option, obtain coverage to protect the Mortgagee’s rights in the Mortgaged
Property in accordance with paragraph 6.
All insurance policies and renewals shall be reasonably acceptable to the Mortgagee and
shall include a standard mortgage clause. If the Mortgagee requires, the Mortgagor shall promptly
give to the Mortgagee all receipts of paid premiums and renewal notices. In the event of loss, the
Mortgagor shall give prompt notice to the insurance carrier and the Mortgagee. The Mortgagee
may make proof of loss if not made promptly by the Mortgagor.
If the Mortgaged Property is acquired by the Mortgagee, the Mortgagor’s rights to any
insurance policies and proceeds resulting from damage to the Mortgaged Property prior to the
acquisition shall pass to the Mortgagee to the extent of the sums secured by this Mortgage
immediately prior to the acquisition.
8. Preservation and Maintenance of Mortgaged Property. The Mortgagor (i) shall
keep the buildings and other Improvements hereafter erected as part of the Phase IA, Building A
Minimum Improvements on the Property in safe and good repair and condition, ordinary wear and
tear and damage by insured casualty excepted (provided that the Mortgagor may proceed to
demolish the existing buildings when vacant), (ii) shall reasonably maintain the parking and
landscaped areas of the Mortgaged Property, (iii) shall not commit waste or permit impairment or
deterioration of the Mortgaged Property, and (iv) shall not remove from the Property any of the
fixtures and personal property included in the Mortgaged Property unless the same is immediately
replaced with like property of at least equal value and utility (provided that Mortgagor may proceed
to demolish and remove all existing personal property and fixtures located on the Property).
9. Inspection. The Mortgagee, or its agents, shall have the right at all reasonable
times, to enter upon the Mortgaged Property for the purposes of inspecting the Mortgaged Property
or any part thereof. The Mortgagee shall, however, have no duty to make such inspection.
10. Protection of Mortgagee’s Security. Subject to the rights of the Mortgagor under
paragraph 6 hereof, if the Mortgagor fail to perform any of the covenants and agreements contained
in this Mortgage or if any action or proceeding is commenced which affects the Mortgaged Property
or the interest of the Mortgagee therein, or the title thereto, then the Mortgagee, at the Mortgagee’s
option, upon advance written notice to the Mortgagor, may perform such covenants and agreements,
defend against and/or investigate such action or proceeding, and take such other action as the
Mortgagee deems necessary to protect the Mortgagee’s interest. The Mortgagee shall be the sole
judge of the legality, validity and priority of any claim, lien, encumbrance, tax assessment, charge
and premium paid by it and of the amount necessary to be paid in satisfaction thereof. The
Mortgagee is hereby given the irrevocable power of attorney (which power is coupled with an
interest and is irrevocable) effective upon the occurrence of an Event of Default, to enter upon the
Mortgaged Property as the Mortgagor’s agent in the Mortgagor’s name to perform any and all
covenants and agreement to be performed by the Mortgagor as herein provided. Any amounts
disbursed or incurred by the Mortgagee pursuant to this paragraph 10 shall become additional
Indebtedness of the Mortgagor secured by this Mortgage. Unless the Mortgagor and the Mortgagee
agree in writing to other terms of repayment, such amounts shall be immediately due and payable.
The Mortgagee shall, at its option, be subrogated to the lien of any mortgage or other lien discharged
in whole or in part by the Indebtedness or by the Mortgagee under the provisions hereof, and any
6
such subrogation rights shall be additional and cumulative security for this Mortgage. Nothing
contained in this paragraph 10 shall require the Mortgagee to incur any expense or do any act
hereunder, and the Mortgagee shall not be liable to the Mortgagor for any damages or claims arising
out of action taken by the Mortgagee pursuant to this paragraph 10.
11. Condemnation.
(a) The Mortgagor hereby irrevocably assigns to the Mortgagee any award or
payment which becomes payable by reason of any taking of the Mortgaged Property, or
any part thereof, whether directly or indirectly or temporarily or permanently, in or by
condemnation or other eminent domain proceedings or by reason of sale under threat
thereof, or in anticipation of the exercise of the right of condemnation or other eminent
domain proceedings (hereinafter called “Taking”). Forthwith upon receipt by Mortgagor
of notice of the institution of any proceeding or negotiations for a Taking, the Mortgagor
shall give notice thereof to the Mortgagee. The Mortgagee may appear in any such
proceedings and participate in any such negotiations and may be represented by counsel.
The Mortgagor, notwithstanding that the Mortgagee may not be a party to any such
proceeding, will promptly give to the Mortgagee copies of all notices, pleadings,
judgments, determinations, and other papers received by the Mortgagor therein. The
Mortgagor will not enter into any agreement permitting or consenting to the Taking of the
Mortgaged Property, or any part thereof, or providing for the conveyance thereof in lieu of
condemnation, with anyone authorized to acquire the same in condemnation or by eminent
domain unless the Mortgagee shall first have consented thereto in writing, which consent
will not be unreasonably withheld. All Taking awards shall be adjusted jointly by the
Mortgagor and the Mortgagee. All awards payable as a result of a Taking shall be paid to
the Mortgagee, which may, at its option, apply them after first deducting the Mortgagee’s
expenses incurred in the collection thereof, to the payment of the Indebtedness, whether or
not due and in such order of application as the Mortgagee may determine, or to the repair
or restoration of the Mortgaged Property, in such manner as the Mortgagee may determine.
Any application of Taking awards to principal of the Indebtedness shall not extend or
postpone the due date of the installments payable under the Indebtedness or change the
amount of such installments.
(b) If the Taking involves a taking of any building or other Improvements now
or hereafter located on the Property, the Mortgagor shall proceed, with reasonable
diligence, to demolish and remove any ruins and complete repair or restoration of the
Mortgaged Property as nearly as possible to its size, type and character immediately prior
to the Taking, but only to the extent that the condemnation awards are available or adequate
to complete such repair or restoration.
(c) The Mortgagor shall promptly reimburse the Mortgagee upon demand for
all of the Mortgagee’s expense (including reasonable attorneys’ fees) incurred in the
collection of awards.
12. Information; Books and Records. The Mortgagor will prepare or cause to be
prepared at the Mortgagor’s expense and deliver to the Mortgagee immediately upon becoming
aware of the existence of any condition or event which constitutes, or which after notice or lapse
7
of time or both would constitute, an Event of Default, written notice specifying the nature and
period of existence thereof and what action the Mortgagor have taken, is taking or proposes to take
with respect thereto. The Mortgagor shall keep and maintain at all times at the Mortgagor’s
address stated below or at such other place as the Mortgagee may approve in writing, complete
and accurate books of accounts and records in sufficient detail to correctly reflect the receipts and
expenses in connection with the acquisition, construction, operation and/or sale of the Mortgaged
Property and copies of all written contracts, leases and other instruments which affect the
Mortgaged Property. Such books, records, contracts, leases and other instruments shall be subject
to examination and inspection by the Mortgagee or its representative during ordinary business
hours.
13. Indemnification by the Mortgagor. The Mortgagor shall bear all loss, expense
(including reasonable attorneys’ fees) and damage in connection with, and agrees to indemnify
and hold harmless the Mortgagee and its agents, servants and employees (the “Indemnified
Parties”) from, all claims, demands and judgments made or recovered against the Indemnified
Parties because of bodily injuries, including death at any time resulting therefrom, and/or because
of damages to property of the Mortgagee or others (including loss of use) from any cause
whatsoever, arising out of, incidental to, or in connection with the construction and/or operation
of the Improvements prior to appointment of a receiver or foreclosure of this Mortgage or arising
by reason of the presence of hazardous or toxic substances on the Property or in the Improvements
or releases thereof from the Mortgaged Property, whether or not due to any act of omission or
commission, including negligence of the Mortgagor or the Mortgagor’s employee, servants or
agents. The Mortgagor’s liability hereunder shall not be limited to the extent of insurance carried
by or provided by the Mortgagor or subject to any exclusion from coverage in any insurance policy.
The obligations of the Mortgagor under this paragraph shall survive the payment of the Note.
Provided, however, that Mortgagor shall not be required to indemnify, defend, and hold harmless
the Indemnified Parties from and against any of the foregoing if such claims, demands, losses,
expenses, and/or judgements made or recovered against or suffered by the Indemnified Parties are
the result of the gross negligence of intentional misconduct of such Indemnified Parties.
14. Security Interest. This Mortgage shall constitute a security agreement with respect
to (and the Mortgagor hereby grants the Mortgagee a security interest in) the tangible personal
property and fixtures included in the Mortgaged Property (as more particularly described in
Granting Clause I of this Mortgage) and the Revenues and Income (as more particularly described
in Granting Clause II). The Mortgagor will from time to time, at the request of the Mortgagee,
execute any and all financing statements covering such personal property and fixtures (in a form
satisfactory to the Mortgagee) which the Mortgagee may reasonably consider necessary or
appropriate to perfect its interest.
15. Events of Default. Each of the following occurrences shall constitute an event of
default hereunder (herein called an “Event of Default”):
(a) The Mortgagor shall fail to duly and punctually pay any obligation payable
under the Note or Loan Agreement which is not cured within ten (10) business days after
written notice from the Mortgagee.
8
(b) The Mortgagor shall fail duly to perform or observe any of the covenants or
agreements contained in this Mortgage (other than default in the performance, or breach,
of any covenant of the Mortgagor in paragraph 1(a) hereof) and such failure shall continue
for a period of sixty (60) days after the Mortgagee has given written notice to the Mortgagor
specifying such default or breach.
(c) The Mortgagor shall make assignment for the benefit of the Mortgagor’s
creditors, or shall admit in writing the Mortgagor’s inability to pay the Mortgagor’s debts
as they become due, or shall file a petition in bankruptcy, or shall become or be adjudicated
bankrupt or insolvent, however defined, or shall file a petition seeking any reorganization,
dissolution, liquidation, arrangement, composition, readjustment or similar relief under any
present or future bankruptcy or insolvency statute, law or regulation or shall file an answer
admitting to or not contesting the material allegations of petition filed against the
Mortgagor in such proceedings, or shall not, within ninety (90) days after the filing of such
petition against the Mortgagor, have same dismissed or vacated, or shall seek or consent to
or acquiesce in the appointment of any trustee, receiver or liquidator of a material part of
the Mortgagor’s properties or of the Mortgaged Property or shall not, within ninety (90)
days after the appointment (without the Mortgagor’s consent or acquiescence) of a trustee,
receiver or liquidator of any material part of the Mortgagor’s properties or of the Mortgaged
Property, have such appointment vacated.
(d) An Event of Default under the Loan Agreement (as defined in the Loan
Agreement) or Note shall have occurred and be continuing or the Mortgagor shall be in
default under any other agreement now or hereafter entered into by the Mortgagor and the
Mortgagee in connection with the Loan Agreement or the Grant-Eligible Activities
contemplated therein after expiration of any applicable cure periods.
(e) The Mortgagor’s investor member, Raymond James Tax Credit Fund XX
L.L.C. (together with its permitted successors and/or assigns, the “Investor Member”),
shall have an opportunity, but not an obligation, to cure any defaults under this Mortgage
and any of the other Loan Documents, and any such cure shall be accepted by the
Mortgagee as if cured by the Mortgagor itself.
16. Remedies. Whenever any Event of Default shall have occurred and be subsisting,
the Mortgagee may, at its option, exercise one or more of the following rights and remedies (and/or
any other rights and remedies available to it), subject to the rights of the Senior Lenders
(hereinafter defined) pursuant to the terms and conditions of the Subordination Agreement
(hereinafter defined):
(a) The Mortgagee may, by written notice to the Mortgagor, declare
immediately due and payable all Indebtedness secured by this Mortgage, and the same shall
thereupon be immediately due and payable, without further notice or demand.
(b) The Mortgagee shall have and may exercise with respect to all personal
property and fixtures which are part of the Mortgaged Property and with respect to the
Revenues and Income all the rights and remedies accorded upon default to a secured party
under the Uniform Commercial Code, as in effect in the State of Minnesota. If notice to
9
the Mortgagor of the intended disposition of such property is required by law in a particular
instance, such notice shall be deemed commercially reasonable if given to the Mortgagor
(in the manner specified in paragraph 20) at least ten (10) calendar days prior to the date
of intended disposition. The Mortgagor shall pay on demand all costs and expenses
incurred by the Mortgagee in exercising such rights and remedies, including without
limitation, reasonable attorneys’ fees and legal expenses.
(c) The Mortgagee may (and is 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 Mortgaged
Property at public auction and convey the same to the purchaser in tenant interest or in fee
simple as the case may be of the Mortgagor’s interest in the Property at the time of such
sale and, out of the proceeds arising from such sale, to pay all Indebtedness secured hereby,
and all legal costs and charges of such foreclosure and the maximum attorneys’ fees
permitted by law, which costs, charges and fees the Mortgagor agree to pay.
THE MORTGAGOR HEREBY CONSENTS TO AND ACKNOWLEDGES THE RIGHT
OF THE MORTGAGEE, AT MORTGAGEE’S OPTION, TO ACT TO FORECLOSE THIS
MORTGAGE BY ACTION OR ADVERTISEMENT PURSUANT TO MINNESOTA
STATUTES, CHAPTER 580 OR 581. A POWER OF SALE BEING HEREIN EXPRESSLY
GRANTED WHICH SHALL ALLOW THE MORTGAGEE TO SELL AT PUBLIC AUCTION
AFTER SERVICE OF NOTICE THEREOF UPON THE OCCUPANT OF THE MORTGAGED
PROPERTY, THE MORTGAGOR ACKNOWLEDGES THAT SUCH SERVICE NEED NOT
BE MADE ON THE MORTGAGOR PERSONALLY UNLESS THE MORTGAGOR IS AN
OCCUPANT OF THE MORTGAGED PROPERTY AND THAT NO HEARING IS REQUIRED
IN CONNECTION WITH THE SALE. MORTGAGOR EXPRESSLY WAIVES ANY AND ALL
RIGHTS TO PRIOR NOTICE OF SALE AND ANY AND ALL RIGHTS TO PRIOR HEARING
IN CONNECTION WITH THE SALE. OUT OF THE PROCEEDS OF SUCH SALE THE
PRINCIPAL AMOUNT OF THE LOAN SHALL BE PAID TOGETHER WITH ALL LEGAL
COSTS AND CHARGES OF FORECLOSURE WITH MAXIMUM ATTORNEYS’ FEES
PERMITTED BY LAW.
(d) The Mortgagee shall be entitled, without notice and without any showing of
waste of the Mortgaged Property, inadequacy of the Mortgaged Property as security for the
Indebtedness, or insolvency of the Mortgagor, to the appointment of a receiver of the rents
and profits of the Mortgaged Property, including those past due.
(e) The Mortgagee may pursue one or more of the remedies provided for in the
Loan Agreement or any other agreement now or hereafter entered into between the
Mortgagor and the Mortgagee in connection with the Loan Agreement or the Grant-
Eligible Activities contemplated herein.
17. Estoppel Certificate. The Mortgagor agrees at any time and from time to time, upon
not less than fifteen (15) days’ prior notice by the Mortgagee, to execute, acknowledge and deliver,
without charge, to the Mortgagee or to any person designated by the Mortgagee, a statement in
writing certifying, to the best of its knowledge, that this Mortgage is unmodified (or if there have
been modifications, identifying the same by the date thereof and specifying the nature thereof), the
10
principal amount then secured hereby, that the Mortgagor has not received any notice of default or
notice of acceleration or foreclosure of this Mortgage (or if the Mortgagor has received such a
notice, that it has been revoked, if such be the case), that to the knowledge of the Mortgagor no
Event of Default exists hereunder (or if any such Event of Default does exist, specifying the same
and stating that the same has been cured, if such be the case), the Mortgagor to the Mortgagor’s
knowledge have no claims or offsets against the Mortgagee (or if the Mortgagor have any such
claims, specifying the same), and the dates to which the principal and the other sums and charges
payable by the Mortgagor pursuant to the Loan Agreement have been paid. In the event the
Mortgagor fails to execute, acknowledge and deliver such statement within the time above
required, the Mortgagor hereby appoint and constitute the Mortgagee as the Mortgagor’s attorney-
in-fact to do so (which power of attorney is coupled with an interest and is irrevocable), the
Mortgagor shall be fully bound by any such statement executed by the Mortgagee on the
Mortgagor’s behalf to the same extent as if the Mortgagor had executed, acknowledged and
delivered the same. The Mortgagee agrees to provide statements of the principal balance payable
pursuant to the Note from time to time upon request of the Mortgagor.
18. Forbearance Not a Waiver, Rights and Remedies Cumulative. No delay by the
Mortgagee in exercising any right shall be deemed a waiver of or preclude the exercise of such
right or remedy, and no waiver by the Mortgagee of any particular provision of this Mortgage shall
be deemed effective unless in writing signed by the Mortgagee. All such rights and remedies
provided for herein or which the Mortgagee may have otherwise, at law or in equity, shall be
distinct, separate and cumulative and may be exercised concurrently, independently or
successively in any order whatsoever, and as often as the occasion therefor arises. The
Mortgagee’s taking action pursuant to paragraph 10 or receiving proceeds, awards or damages
pursuant to paragraph 7 or 11 shall not impair any right or remedy available to the Mortgagee
under paragraph 16 hereof. Acceleration of maturity of the Indebtedness, once claimed hereunder
by the Mortgagee, may, at the option of Mortgagee, be rescinded by written acknowledgment to
that effect by the Mortgagee, but the tender and acceptance of partial payments alone shall not in
any way affect or rescind such acceleration of maturity of the Indebtedness.
19. Successors and Assigns Bound; Number; Gender; Agents; Captions. The
covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the
respective heirs, legal representatives, successors and assignees of the Mortgagee and the
Mortgagor. Wherever used, the singular number shall include the plural, and the plural the
singular, and the use of any gender shall apply to all genders. In exercising any rights hereunder
or taking any actions provided for herein, the Mortgagee may act through its employees, agents or
independent contractor as authorized by Mortgagee. The captions and headings of the paragraphs
of this Mortgage are for convenience only and are not to be used to interpret or define the
provisions hereof.
20. Notice. Any notice from the Mortgagee to the Mortgagor under this Mortgage shall
be deemed to have been given by the Mortgagee and received by the Mortgagor when mailed by
certified mail by the Mortgagee or its agents to the Mortgagor at the address set forth in
paragraph 26(a) below or at such other address as the Mortgagor may designate in writing to the
Mortgagee. Any notice from the Mortgagee to the Mortgagor shall also be required to be
contemporaneously provided to the following persons at the following addresses:
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With a copy to:
With a copy to the Investor Member:
And a copy to:
Winthrop & Weinstine, P.A.
225 South Sixth Street, Suite 3500
Minneapolis, MN 55402
Attention: John M. Stern
Raymond James Tax Credit Fund XX L.L.C.
c/o Raymond James Affordable Housing
Investments, Inc.
880 Carillon Parkway
St. Petersburg, FL 33716
Attention: Steven J. Kropf, President
Nixon Peabody LLP
Exchange Place
53 State Street
Boston, MA 02109
Attention: Nate Bernard, Esq.
21. Governing Law; Severability. This Mortgage shall be governed by the laws of the
State of Minnesota. In the event that any provision or clause of this Mortgage conflicts with
applicable law, such conflict shall not affect other provisions of this Mortgage which can be given
effect without the conflicting provisions and to this end the provisions of the Mortgage are declared
to be severable.
22. Counterparts. This Mortgage may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one instrument.
23. Waiver of Marshaling. The Mortgagor, any party who consents to this Mortgage
and any party who now of hereafter acquires a lien on the Mortgaged Property and who has actual
or constructive notice of this Mortgage hereby waives any and all right to require the marshaling
of assets in connection with the exercise of any of the remedies permitted by applicable law or
provided herein and waives any right to have the Mortgaged Property sold in separate tracts
pursuant to Minnesota Statutes, Section 580.08.
24. Construction Mortgage. This Mortgage secures an obligation incurred for the
construction of an improvement on land and is a construction mortgage.
25. Application of Rents. Notwithstanding anything to the contrary herein, all Rents
collected by the Mortgagee or any receiver each month shall be applied as determined by
Mortgagor, or as otherwise determined by applicable law.
26. Fixture Filing. From the date of its recording, this Mortgage shall be effective as a
financing statement filed as a fixture filing with respect to all goods constituting part of the
Mortgaged Property (as more particularly described in Granting Clause I of this Mortgage) which
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are or are to become fixtures related to the real estate described herein. For this purpose, the
following information is set forth:
(a) Name and Address of the Mortgagor:
Alatus Hopkins LIHTC I LLC
c/o Alatus LLC
80 South Eighth Street, Suite 4155
Minneapolis, MN 55402
Attn: Robert C. Lux and Chris Osmundson
(b) Name and Address of Secured Party:
City of Hopkins, Minnesota
1010 First Street South
Hopkins, MN 55343
Attn: City Manager
(c) This document covers goods which are or are to become fixtures.
(d) The Mortgagor’s state organizational filing number is 1313814900020
27. Additional Provisions.
(a) The Mortgagee agrees, notwithstanding any other provision herein to the
contrary, that in the event of a foreclosure of the Property, that no tenant may be evicted or
tenancy terminated (other than for good cause), and the rent on no apartment unit may be
increased, for the three year period following foreclosure if such eviction, termination of
tenancy or increase in rent would be contrary to the provisions of Section 42(h)(6)(E) of
the Internal Revenue Code of 1986, as amended. This Mortgage is expressly subordinate
to this provision.
(b) This Mortgage and the Note shall be construed according to the laws of the
State of Minnesota.
(c) In the event of any fire or other casualty to the Phase IA, Building A
Minimum Improvements or eminent domain proceedings resulting in condemnation of the
Phase IA, Building A Minimum Improvements or any part hereof, the Mortgagor shall
have the right to rebuild the Phase IA, Building A Minimum Improvements, and to use all
available insurance or condemnation proceeds therefor, provided that no material default
then exists under the Loan Documents. If the casualty or condemnation affects only part
of the Phase IA, Building A Minimum Improvements and total rebuilding is infeasible,
then proceeds may be used for partial rebuilding and partial repayment of the Loan in a
manner that provides adequate security to the Mortgagee for repayment of the remaining
balance of the Loan.
13
(d) The Mortgagor will permit the Mortgagee’s authorized representatives to
enter the Property at all times during normal business hours for the purpose of inspecting
the same; provided the Mortgagee shall have no duty to make such inspections and shall
not incur any liability or obligation for making or not making any such inspections.
(e) The Mortgagor hereby agrees to defend, indemnify, and hold harmless
Mortgagee from and against any and all claims, losses, damages, liabilities, costs, and
expenses (including without limitation reasonable attorneys’ fees) incurred by the
Mortgagee as a result of any hazardous materials or substances which are on the Property
in violation of applicable environmental laws at any time during which the Mortgagor shall
be in custody or control of the Property; and this indemnification shall remain in full force
and effect and shall survive the repayment of the Loan and the exercise of any remedy by
the Mortgagee hereunder including a foreclosure of the Mortgage or the acceptance of a
deed in lieu of foreclosure.
(f) The Mortgagor shall have the right and privilege, but not the obligation, to
borrow additional funds and to further encumber the security and collateral given and
pledged to the Mortgagee hereunder at any time, from time to time, and as often as the
Mortgagor shall determine, but only with the prior written consent of the Mortgagee, which
consent shall not be unreasonably withheld, delayed and conditioned, except for the
Permitted Encumbrances set forth in EXHIBIT B.
(g) If the Mortgagor fails to perform any of the covenants and agreements
contained in this Mortgage, subject to any applicable cure periods and rights of
Mortgagor’s Investor Member to cure, or if any action or proceeding is commenced which
effects the Property or the interest of the Mortgagee therein, or the title thereto, then the
Mortgagee, at Mortgagee’s option, upon sixty (60) days advance written notice to the
Mortgagor, may perform such covenants and agreements to defend against and/or
investigate such action or proceeding, and take such other action as the Mortgagee deems
necessary to protect the Mortgagee’s interest. The Mortgagee shall be the sole judge of the
legality, validity and priority of any claim, lien, encumbrance, tax assessment, charge and
premium paid by it and of the amount necessary to be paid in satisfaction thereof. The
Mortgagee is hereby given the irrevocable power of attorney (which power is coupled with
an interest and is irrevocable) effective sixty (60) days after written notice, to enter upon
the Property as the Mortgagor’s agent in the Mortgagor’s name to perform any and all
covenants and agreements to be performed by the Mortgagor as herein provided. Any
amounts disbursed or incurred by the Mortgagee pursuant to this paragraph shall become
additional indebtedness of the Mortgagor secured by this Mortgage. Unless the Mortgagor
and the Mortgagee agree in writing to other terms of repayment, such amounts shall be
immediately due and payable. The Mortgagee shall, at its option, be subrogated to the lien
of any mortgage or other lien discharged in whole or in part by the indebtedness or by the
Mortgagee under the provisions hereof, and any such subrogation rights shall require the
Mortgagee to incur any expense or do any act hereunder, and the Mortgagee shall not be
liable to the Mortgagor for any damages or claims arising out of action taken by the
Mortgagee pursuant to this paragraph.
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28. Removal of Managing Member. Notwithstanding anything to the contrary
contained in the Loan Documents and this Mortgage, the removal or withdrawal in lieu of removal
and replacement of Mortgagor’s managing member shall be permitted as set forth and in
accordance with the Mortgagor’s Second Amended and Restated Operating Agreement dated as
of September 1, 2022 (as may be amended from time to time, the “Operating Agreement”) and
shall not constitute a default hereunder or under any other Loan Documents, and any amendment
to Mortgagor’s Operating Agreement to effectuate such transfer(s) shall not require Mortgagee’s
consent.
29. Assignment of Investor Member Interest. Notwithstanding anything to the contrary
contained in the Loan Documents and this Mortgage, the interest of Mortgagor’s Investor Member
shall be freely transferrable, and any amendment to Mortgagor’s Operating Agreement to
effectuate such transfer(s) shall not require Mortgagee’s consent.
30. Subordination. The terms and conditions of this Mortgage and the rights of the
Mortgagee hereunder are subject in their entirety to the terms and conditions of that certain
Subordination Agreement, dated as of September 1, 2022 (the “Subordination Agreement”),
between the Mortgagor, The Huntington National Bank, a national banking association, as bond
trustee, and the Mortgagee, as subordinate lender. The Mortgagee expressly agrees that its rights
under the Mortgage shall be subordinate to the refinancing of any loan which is secured by any
senior mortgage identified in the Subordination Agreement. The holder of any such senior
mortgage is referred to herein as a “Senior Lender.” Recording of this Mortgage will evidence the
Mortgagee’s acceptance of this provision. Without limitation of the foregoing, this Mortgage is
subject and subordinate to the various financing and loans as described in the Master Subordination
Agreement. Any subordination agreement must be approved by the City Council of the
Mortgagee.
THE MORTGAGOR ACKNOWLEDGES THAT THIS IS A LEGAL DOCUMENT AND THAT
BEFORE SIGNING THE MORTGAGOR HAS FULLY UNDERSTOOD THE TERMS AND
CONDITIONS HEREIN, AND THE RIGHTS WAIVED HEREBY AND THE EFFECT OF
SUCH WAIVER OR HAS SOUGHT LEGAL COUNSEL TO EXPLAIN SUCH TERMS AND
CONDITIONS, RIGHTS AND THE WAIVER OF SUCH RIGHTS.
(The remainder of this page is intentionally left blank.)
S-1
IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage to be duly executed
as of the day and year first above written.
ALATUS HOPKINS LIHTC I LLC, a Minnesota
limited liability company
By: Alatus Hopkins LIHTC I MM LLC, a
Minnesota limited liability company
Its: Managing Member
By:
Name: Christian B. Osmundson
Title: Vice President
STATE OF MINNESOTA )
) ss.
COUNTY OF ____________ )
The foregoing instrument was acknowledged before me this _____ day of September,
2022, by Christian B. Osmundson, the Vice President of Alatus Hopkins LIHTC I MM LLC, a
Minnesota limited liability company, the Managing Member of Alatus Hopkins LIHTC I LLC, a
Minnesota limited liability company, on behalf of the Mortgagor.
Notary Public
This document drafted by:
Kennedy & Graven, Chartered (JAE)
150 South Fifth Street
Minneapolis, MN 55402-1299
A-1
EXHIBIT A
LEGAL DESCRIPTION
Real property in the City of Hopkins, County of Hennepin, State of Minnesota, described as
follows:
Lot 2, Block 2, Mile 14 On Minnehaha Creek, according to the recorded plat thereof, Hennepin
County, Minnesota.
Torrens Property.
B-1
EXHIBIT B
PERMITTED ENCUMBRANCES
[Insert list of Permitted Encumbrances]
HP145-47 (JAE)
822040v2
NOTE
$220,000 Hopkins, Minnesota
September ___, 2022
FOR VALUE RECEIVED, the undersigned (herein called the “Borrower”), promises to
pay to the order of the CITY OF HOPKINS, MINNESOTA, a municipal corporation of the State
of Minnesota, or its assigns (the “Lender”), the sum of Two Hundred Twenty Thousand and
No/100 Dollars ($220,000.00) (the “Loan”). Said sum was made available to the Borrower
pursuant to the terms of a Loan Agreement of even date herewith (the “Loan Agreement”) between
the Lender and the Borrower to enable the Borrower to undertake the development of the
Grant-Eligible Activities (as defined in the Loan Agreement) on Property (as defined in the Loan
Agreement) located in the City of Hopkins, Minnesota.
1. This Note shall not bear interest.
2. The principal of the Loan shall be due and payable in one lump sum on the earliest
of: (a) January 1, 2065, (b) the sale of any portion of the Property by the Borrower without the
Lender’s prior consent, or (c) the Borrower’s default under the Loan Agreement or Combination
Mortgage and Security Agreement of even date herewith (the “Mortgage”) from the Borrower to
the Lender (the “Maturity Date”), at which time all unpaid principal and interest is due and payable.
This Note may also be required to be repaid in whole or in part in accordance with Article IX of
the Loan Agreement. The Note may be prepaid at any time without penalty.
3. If suit is instituted by Lender, or its successors or assigns, to recover on this Note,
the Borrower agrees to pay all costs of such collection actually incurred, including reasonable
attorneys’ fees and court costs. If this Note be reduced to judgment, such judgment shall bear the
lawful interest rate pertaining to judgments, but not to exceed six percent (6%) per annum.
4. The Borrower hereby waives presentment, demand, protest and notice of demand,
protest and nonpayment of this Note.
5. This Note is given pursuant to the Loan Agreement and the Mortgage delivered by
the Borrower. If either the Loan Agreement or the Mortgage is found to be invalid for whatever
reason, such invalidity shall constitute an Event of Default hereunder. This Note is secured by the
Mortgage and such Mortgage describes the rights of the Lender as to the acceleration of the
indebtedness evidenced by this Note.
All of the agreements, conditions, covenants, provisions, and stipulations contained in the
Loan Agreement, the Mortgage, or any other instrument securing this Note 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 Loan Agreement, the Mortgage, or any other instrument securing this Note, then the Lender
may at its right and option, without notice, declare immediately due and payable the principal
balance of this Note and interest accrued thereon, together with reasonable attorneys’ fees and
expenses incurred by the Lender in collecting or enforcing payment hereof, whether by lawsuit or
2
otherwise, and all other sums due hereunder or any instrument securing this Note.
6. The remedies of the Lender as provided herein and in the Loan Agreement, the
Mortgage, or any other instrument securing this Note shall be cumulative and concurrent and may
be pursued singly, successively, or together, and, at the sole discretion of the Lender, 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 Lender 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 Lender
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.
7. 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.
8. This Note shall be governed by and construed in accordance with the laws of the
State of Minnesota.
9. Neither the Borrower nor any member shall have any personal liability for the
Borrower’s obligations hereunder, it being recognized by the Lender the obligations of the
Borrower hereunder are non-recourse obligations and that the remedies of the Lender are limited
to the collateral security provided in connection with the Loan.
10. The Lender acknowledges that this Note is subject in all respects to the terms of
that certain Subordination Agreement, dated as of September 1, 2022 (the “Subordination
Agreement”), between the Borrower, The Huntington National Bank, a national banking
association, as bond trustee, and the Lender, as subordinate lender, and the Master Subordination
Agreement, dated September __, 2022, between the Housing and Redevelopment Authority in and
for the City of Hopkins, the City of Hopkins, the Hennepin County Housing and Redevelopment
Authority, the Redeveloper, and the Borrower. No payments may be made under this Note so long
as there is an event of default outstanding and uncured with respect to any of the loans senior to
the Mortgage under the Subordination Agreement. The Lender declares, agrees, and
acknowledges that it will not, without prior written consent of the lender of any loan senior to the
Mortgage, (i) sue the Borrower under this Note; (ii) accelerate or accept a prepayment in full of
this Note; (iii) seek or obtain a receiver for the Phase IA, Building A Minimum Improvements (as
defined in the Loan Agreement) or any portion thereof; (iv) take possession or control of the Phase
IA, Building A Minimum Improvements, or collect or accept any rents from the Phase IA, Building
A Minimum Improvements; (v) take any action that would terminate any leases or other rights
held by or granted to or by third parties with respect to the Phase IA, Building A Minimum
3
Improvements; (vi) initiate or join any other creditor in commencing any proceeding in bankruptcy
or otherwise with respect to the Borrower; (vii) incur any obligation to the Borrower other than as
provided in this Note or otherwise permitted under the documents evidencing and securing the
loans senior to the Mortgage; (viii) exercise any other remedies under this Note; or (ix) take any
other enforcement action against the Borrower or the Phase IA, Building A Minimum
Improvements or any portion thereof.
11. 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.
(The remainder of this page is intentionally left blank.)
S-1
IN WITNESS WHEREOF, this Note has been duly executed by the undersigned as of the
date and year first written above.
ALATUS HOPKINS LIHTC I LLC, a Minnesota
limited liability company
By: Alatus Hopkins LIHTC I MM LLC, a
Minnesota limited liability company
Its: Managing Member
By:
Name: Christian B. Osmundson
Title: Vice President
HP145-47 (JAE)
822042v2
ACTIVE 681952271v3
GT Draft 09/14/22
SUBORDINATION AGREEMENT
by and among
ALATUS HOPKINS LIHTC I LLC,
THE HUNTINGTON NATIONAL BANK,
as Trustee,
and
CITY OF HOPKINS, MINNESOTA
Dated as of September 1, 2022
Relating to:
$19,930,000
City of Hopkins, Minnesota
Multifamily Housing Revenue Bonds
(325 Blake Apartments)
Series 2022A
$5,840,000
City of Hopkins, Minnesota
Taxable Multifamily Housing Revenue Bonds
(325 Blake Apartments)
Series 2022B
This instrument prepared by and
when recorded return to:
Greenberg Traurig, LLP
1717 Arch Street, Suite 400
Philadelphia, Pennsylvania 19103
Dianne Coady Fisher, Esquire
SUBORDINATION AGREEMENT
This SUBORDINATION AGREEMENT dated as of September 1, 2022 (as amended, modified,
supplemented or assigned from time to time, this “Agreement”) by and among ALATUS HOPKINS
LIHTC I LLC, a limited liability company duly organized and validly existing under the laws of the State
of Minnesota (together with its permitted successors and assigns, the “Borrower”), THE HUNTINGTON
NATIONAL BANK, a national banking association duly organized and validly existing under the laws of
the United States of America, as trustee (together with its permitted successors and assigns, the “Trustee”
or the “Senior Lender”) and CITY OF HOPKINS, MINNESOTA, a municipal corporation of the State
of Minnesota (together with its permitted successors and assigns, the “Subordinate Lender”),
W I T N E S S E T H:
WHEREAS, the Borrower is the owner in fee of certain property located in the City of Hopkins,
Minnesota, more particularly described on Exhibit A attached hereto, on which the Borrower intends to
construct certain improvements consisting of a 116-unit multifamily housing facility, together with related
amenities (such property and the improvements described above are collectively referred to herein as the
“Property”);
WHEREAS, the Property is being constructed, in part, with the proceeds of those certain
$19,930,000 Multifamily Housing Revenue Bonds (325 Blake Apartments), Series 2022A (the “Tax-
Exempt Bonds”) and $5,840,000 Taxable Multifamily Housing Revenue Bonds (325 Blake Apartments),
Series 2022B (the “Taxable Bonds” and together with the Tax-Exempt Bonds, the “Bonds”), issued by City
of Hopkins, Minnesota (the “Issuer”), pursuant to an Indenture of Trust dated as of July 1, 2022, by and
between the Issuer and the Trustee (as amended, modified or supplemented from time to time, the
“Indenture”);
WHEREAS, the proceeds of the Bonds are being loaned to the Borrower pursuant to the terms of
a Loan Agreement dated as of July 1, 2022, by and between the Issuer and the Borrower (as amended,
modified or supplemented from time to time, the “Loan Agreement”);
WHEREAS, the Borrower’s obligations under the Loan Agreement are evidenced by two (2)
promissory notes each dated as of the date of issuance of the Bonds (as amended, modified or supplemented
from time to time, the “Note”), and are secured by, among other things, a first-priority mortgage lien on the
Property granted pursuant to a Mortgage, Assignment of Rents, Security Agreement and Fixture Financing
Statement and assigned to the Trustee pursuant to an Assignment of Mortgage each dated as of July 1, 2022
(as each may be amended, modified or supplemented from time to time, the “Senior Mortgage”), and an
Assignment of Leases, Rents and Other Income dated as of July 1, 2022 (as amended, modified or
supplemented from time to time, the “Senior Assignment” and together with the Senior Mortgage, the
“Senior Mortgage Documents,” which, together with the Loan Agreement, the Note and all other
agreements contemplated therein or evidencing or securing the Borrower’s obligations under the Loan
Agreement are hereinafter collectively referred to as the “Senior Loan Documents” and the indebtedness
evidenced and secured by the Senior Loan Documents is hereinafter collectively referred to as the “Senior
Indebtedness”);
WHEREAS, the Property was acquired and is being constructed, in part, with the proceeds of a
loan to the Borrower made by the Subordinate Lender, pursuant to a Loan Agreement dated as of September
1, 2022 (the “Subordinate Loan Agreement”) and evidenced by a promissory note in the original face
amount of $220,000 (the “Subordinate Note”);
2
WHEREAS, the Borrower’s obligations to the Subordinate Lender under the Subordinate Loan
Agreement and the Subordinate Note (the “Subordinate Indebtedness”) are secured by a Combination
Mortgage and Security Agreement dated as of September 1, 2022 (the “Subordinate Mortgage”) (the
Subordinate Loan Agreement, the Subordinate Note, the Subordinate Mortgage and all other agreements
contemplated therein or evidencing or securing the Subordinate Indebtedness are hereinafter referred to as
the “Subordinate Loan Documents”); and
WHEREAS, it is a requirement of the Senior Loan Documents that the Senior Mortgage
Documents shall be and remain liens or charges upon the Property prior and superior to the lien or charge
of the Subordinate Mortgage, that the Subordinate Indebtedness be subordinated in right of payment to the
Senior Indebtedness and that the Subordinate Indebtedness be payable solely from cash available after
payment of operating expenses of the Property and amounts due and owing in respect of the Senior
Indebtedness.
NOW, THEREFORE, in consideration of the foregoing and the mutual benefits accruing to the
parties hereto and for other good and valuable consideration, the receipt and sufficiency of which
consideration is hereby acknowledged and intending to be legally bound hereby, it is hereby declared,
understood and agreed by the parties as follows:
1. Subordination of Subordinate Mortgage . The Subordinate Lender declares, agrees and
acknowledges that the Senior Mortgage Documents, and any renewals or extensions thereof, and any
modifications thereof or substitutions therefor which do not increase the principal balance secured thereby
(except increases by reason of protective advances or payment of the Senior Lender’s costs) and all
advances made pursuant to the Senior Mortgage Documents, all costs and expenses secured thereby and
interest on the foregoing, shall unconditionally be and remain at all times liens or charges on the Property
prior and superior to the lien or charge of the Subordinate Mortgage.
2. Subordination of Subordinate Indebtedness; Remitting Subordinate Loan Payments to
Senior Lender; Reinstatement.
(a) The Subordinate Indebtedness is hereby subordinated in right of payment to any
and all of the Senior Indebtedness and shall be payable only from and to the extent of revenues of the
Property available after payment of all amounts then due and owing under the Senior Loan Documents and
all current operating expenses of the Property. Notwithstanding the foregoing, unless and until the Senior
Lender gives the Subordinate Lender notice of the occurrence of a default under the Senior Loan
Documents, the Subordinate Lender may receive and accept payments on account of principal and interest
payable under the Subordinate Note to the extent of cash flow of the Borrower available after payment of
current operating expenses of the Property and amounts then due and owing under the Senior Loan
Documents.
(b) If the Subordinate Lender shall receive any payments or other rights in any
property of the Borrower after the Senior Lender has given the Subordinate Lender notice of a default under
the Senior Loan Documents, such payment or property shall be received by the Subordinate Lender in trust
for the Senior Lender and shall immediately be delivered and transferred to the Senior Lender.
(c) If at any time payment of all or any part of the Senior Indebtedness is rescinded or
must otherwise be restored or returned by the Senior Lender in connection with any bankruptcy,
reorganization, arrangement, insolvency, liquidation or similar proceedings (a “Proceeding”) in respect of
the Borrower or the Managing Member, and the Subordinate Lender has received payment of all or any
part of the Subordinate Indebtedness, the Subordinate Lender shall forthwith turn over the same to, and for
3
the account of, the Senior Lender, until the Senior Lender has received indefeasible payment in full of any
such payments on the Senior Indebtedness that have been so rescinded, restored or returned.
3. Exercise of Remedies.
(a) The Subordinate Lender declares, agrees, and acknowledges that it will not,
without the prior written consent of the Senior Lender: (i) sue the Borrower under any of the Subordinate
Loan Documents; (ii) accelerate or accept a prepayment in full of the Subordinate Indebtedness; (iii)
commence any action to foreclose or exercise any power of sale under the Subordinate Mortgage; (iv)
accept a deed or assignment in lieu of foreclosure for the Property or any part or portion thereof; (v) seek
or obtain a receiver for the Property or any part or portion thereof; (vi) take possession or control of the
Property, or collect or accept any rents from the Property; (vii) take any action that would terminate any
leases or other rights held by or granted to or by third parties with respect to the Property; (viii) initiate or
join any other creditor in commencing any Proceeding with respect to the Borrower; (ix) incur any
obligation to the Borrower other than as provided in the Subordinate Loan Agreement, (x) exercise any
other remedies under the Subordinate Loan Documents; or (xi) take any other enforcement action against
the Property or any part or portion thereof.
(b) The Subordinate Lender agrees that the Senior Lender shall have, as determined in
accordance with and subject to the terms of the Senior Loan Documents, upon the occurrence of an Event
of Default under and as defined in the Senior Loan Documents, the right to (i) accelerate the Senior
Indebtedness; (ii) commence any action to foreclose or exercise any power of sale under the Senior
Mortgage; (iii) accept a deed or assignment in lieu of foreclosure for the Property or any part or portion
thereof; (iv) seek or obtain a receiver for the Property or any part or portion thereof; (v) take possession or
control of the Property, and collect and accept rents from the Property; (vi) sue the Borrower under any of
the Senior Loan Documents; (vii) exercise any rights of set-off or recoupment that the Senior Lender may
have against the Borrower; or (viii) take any other enforcement action against the Property or any part or
portion thereof, all without any responsibility or liability to the Subordinate Lender with respect to the
Property.
(c) The Subordinate Lender agrees that the Senior Lender shall have absolute power
and discretion, without notice to the Subordinate Lender, to deal in any manner with the Senior
Indebtedness, including interest, costs and expenses payable by the Borrower to the Senior Lender, and any
security and guaranties therefor, including, but not by way of limitation, release, surrender, extension,
renewal, acceleration, compromise or substitution; provided that the Senior Lender shall not increase the
principal amount of the indebtedness to which the Subordinate Loan Documents are subordinate (other than
increases resulting from protective advances or payment of the Senior Lender’s costs) without the prior
written consent of the Subordinate Lender, which consent shall not be unreasonably withheld or delayed.
(d) The Subordinate Lender further agrees that if at any time the Subordinate Lender
should commence any foreclosure proceeding, or commence any action to execute on any lien obtained by
way of attachment or otherwise on the Property, or otherwise take any action prohibited under Section 3(a)
hereof, the Senior Lender shall (unless the Senior Lender has consented to such action or remedy) be entitled
to have the same vacated, dissolved and set aside by such proceedings at law or otherwise as the Senior
Lender may deem proper, and this Agreement shall be and constitute full and sufficient grounds therefor
and shall entitle the Senior Lender to become a party to any proceedings at law or otherwise in or by which
the Senior Lender may deem it proper to protect its interests hereunder.
(e) No act, omission, breach or other event under this Agreement shall defeat,
invalidate or impair in any respect the absolute, unconditional and irrevocable subordination of the
Subordinate Loan Documents to the Senior Loan Documents as provided in this Agreement.
4
4. No Marshaling of Assets. The Subordinate Lender specifically waives and renounces any
right which it may have under any applicable statutes, whether at law or in equity, to require the Senior
Lender to marshal collateral or to otherwise seek satisfaction from any particular assets or properties of the
Borrower or from any third party.
5. Bankruptcy Matters.
(a) The subordination provided for in this Agreement shall apply, notwithstanding the
availability of other collateral to the Senior Lender or the actual date and time of execution, delivery,
recordation, filing or perfection of the Senior Mortgage Documents or the Subordinate Mortgage and,
insofar as the Subordinate Lender is concerned, notwithstanding the fact that the Senior Indebtedness or
any claim for the Senior Indebtedness may be subordinated, avoided or disallowed, in whole or in part, as
against the Borrower under the Bankruptcy Code or other applicable federal or state law. In the event of
any Proceeding, the Senior Indebtedness shall include all interest and fees accrued on the Senior
Indebtedness, in accordance with and at the rates specified in the Senior Loan Documents, both for periods
before and for periods after the commencement of such Proceeding, even if the claim for such interest
and/or fees is not allowed as against the Borrower pursuant to applicable law.
(b) Without the prior written consent of the Senior Lender, the Subordinate Lender
shall not, and the Subordinate Lender waives any and all right to: (i) request adequate protection (as that
term is defined in the Bankruptcy Code) (and in the event any such adequate protection is awarded to the
Subordinate Lender, the Subordinate Lender hereby assigns any adequate protection in the form of cash to
the Senior Lender and any adequate protection in the form of a lien on or security interest in the Property
or any other Collateral is hereby subordinated to all of the Senior Lender’s rights, liens or security interests
in or to the Property and such other Collateral), (ii) file or support any motion for dismissal or relief from
the automatic stay (as defined in the Bankruptcy Code), (iii) request any post-petition interest, (iv) request
any sale of the Borrower’s assets, or (v) file, propose, support, accept or reject any plan of reorganization
of the Borrower. The Subordinate Lender further agrees that, with respect to any Proceeding: (1) it shall
not make any election, give any consent, commence any action or file any motion, claim, obligation, notice
or application or take any other action in any Proceeding by or against the Borrower or the Managing
Member without the prior written consent of the Senior Lender; (2) the Senior Lender may vote in any such
Proceeding any and all claims of the Subordinate Lender against the Borrower or the Managing Member,
and the Subordinate Lender hereby appoints the Senior Lender as its agent, and grants to the Senior Lender
an irrevocable power of attorney coupled with an interest, and its proxy, for the purpose of exercising any
and all rights and taking any and all actions available to the Subordinate Lender in connection with any
case by or against the Borrower or the Managing Member in any Proceeding, including, without limitation,
the right to file and/or prosecute any claims, to vote to accept or reject a plan, and to make any election
under Section 1111(b) of the Bankruptcy Code; and (3) the Subordinate Lender shall not challenge the
validity or amount of any claim submitted in such Proceeding by the Senior Lender in good faith or any
valuations of the Property or any other Collateral, or any portion of the foregoing, or other Senior
Indebtedness collateral submitted by the Senior Lender in good faith, in such Proceeding or take any other
action in such Proceeding, which is adverse to the Senior Lender’s enforcement of its claim or receipt of
adequate protection (as that term is defined in the Bankruptcy Code).
(c) The Subordinate Lender agrees that the Senior Lender does not owe any fiduciary
duty to the Subordinate Lender in connection with the administration of the Senior Indebtedness and the
Senior Loan Documents and the Subordinate Lender agrees not to assert any such claim. The Subordinate
Lender acknowledges that the Senior Lender shall have the sole discretion to exercise or not exercise the
rights set forth in this Agreement from time to time; and that such rights may be exercised solely in the
interest of the Senior Lender and without regard to the interest of the Subordinate Lender in any action or
proceeding, including in connection with any Proceeding.
5
6. Payment Set Aside. To the extent any payment under any of the Senior Loan Documents
(whether by or on behalf of the Borrower, as proceeds of security or enforcement of any right of set-off, or
otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to a trustee, receiver
or other similar party under the Bankruptcy Code or any federal or state bankruptcy, insolvency,
receivership or similar law, then if such payment is recovered by, or paid over to, such trustee, receiver or
other similar party, the Senior Indebtedness or part thereof originally intended to be satisfied shall be
deemed to be reinstated and outstanding as if such payment had not occurred.
7. Casualty and Condemnation Proceeds. The Subordinate Lender shall have no right to
participate in the adjustment of the proceeds of insurance payable as the result of any casualty to the
Improvements, or to participate in any manner whatsoever in activities relating to restoration or
reconstruction of the Improvements, and the Senior Lender shall have the exclusive right to receive,
administer and apply all such proceeds as set forth in the Senior Loan Documents. In the event the Senior
Lender shall release, for the purposes of restoration of all or any part of the Property, its right, title and
interest in and to the proceeds under policies of insurance thereon, and/or its right, title and interest in and
to any awards, or its right, title and interest in and to other compensation made for any damages, losses or
compensation for other rights by reason of a taking in eminent domain, the Subordinate Lender shall
simultaneously release for such purpose all of the Subordinate Lender’s right, title and interest, if any, in
and to all such insurance proceeds, awards or compensation. The Subordinate Lender agrees that the
balance of such proceeds remaining after such restoration, or all of such proceeds in the event such proceeds
are not released for any such restoration pursuant to the Senior Loan Documents, shall be applied to the
payment of amounts due under the Senior Loan Documents until all such amounts have been indefeasibly
paid in full, prior to being applied to the payment of any amounts due under the Subordinate Loan
Documents. If the Senior Lender holds such proceeds, awards or compensation and/or monitors the
disbursement thereof, the Subordinate Lender agrees that the Senior Lender shall also hold and monitor the
disbursement of such proceeds, awards and compensation to which the Subordinate Lender is or may be
entitled. Nothing contained in this Agreement shall be deemed to require the Senior Lender, in any way
whatsoever, to act for or on behalf of the Subordinate Lender or to hold or monitor any proceeds, awards
or compensation in trust for or on behalf of the Subordinate Lender.
8. Indemnification and Subrogation. If the Subordinate Lender or any affiliate shall acquire,
by indemnification, subrogation or otherwise, any lien, estate, right or other interest in the Property, that
lien, estate, right or other interest shall be subordinate to the Senior Mortgage Documents and the other
Senior Loan Documents as provided herein, and the Subordinate Lender or such affiliate hereby waives,
until all amounts owed under the Senior Loan Documents have been indefeasibly paid in full, the right to
exercise any and all such rights it may acquire by indemnification, subrogation or otherwise.
9. Subordination Effective. This Agreement, the subordination effected hereby, and the
respective rights and priorities of the parties hereto in and to the Property, shall be effective as stated herein,
notwithstanding any modification or amendment of any Senior Loan Document (other than any
modification or amendment of any Senior Loan Document that increases the amount of indebtedness to
which the Subordinate Indebtedness is subordinate for reasons other than protective advances or costs of
the Senior Lender), or the obtaining by the Senior Lender or the Subordinate Lender of any additional
document confirming, perfecting or otherwise affecting the Senior Loan Documents, or the Subordinate
Loan Documents, as the case may be.
10. Amendments of Subordinate Loan Documents and Senior Loan Documents. The
Borrower and the Subordinate Lender agree that they will not enter into any amendment, modification or
supplement to any of the Subordinate Loan Documents without the express prior written consent of the
Senior Lender (which consent shall not be unreasonably withheld). No consent of the Subordinate Lender
shall be required for any amendment, modification or supplement to any of the Senior Loan Documents,
6
provided that no amendment, modification or supplement to any of the Senior Loan Documents shall
increase the amount of indebtedness to which the Subordinate Loan Documents are subordinate other than
increases resulting from protective advances or costs of the Senior Lender.
11. Notice of Defaults. The Subordinate Lender hereby agrees to give notice to the Senior
Lender of any default (or event that, with the giving of notice or passage of time, or both, would constitute
a default) under the Subordinate Loan Documents.
12. Cross Default. The Borrower and the Subordinate Lender agree that a default under the
Subordinate Loan Documents or the Subordinate Lender’s default hereunder shall, at the election of the
Senior Lender, constitute a default under the Senior Loan Documents and the Senior Lender shall have the
right to exercise all rights or remedies under the Senior Loan Documents in the same manner as in the case
of any other default under the Senior Loan Documents. If the Subordinate Lender notifies the Senior Lender
in writing that any default under the Subordinate Loan Documents has been cured or waived, as determined
by the Subordinate Lender in its sole discretion, then provided that the Senior Lender has not conducted a
foreclosure or exercised its rights with respect to the power of sale of the Property pursuant to its rights
under the Senior Loan Documents, any default under the Senior Loan Documents arising solely from such
default under the Subordinate Loan Documents shall be deemed cured, and the Senior Indebtedness shall
be reinstated.
13. Further Assurances. The parties hereto shall cooperate fully with each other in order to
carry out promptly and fully the terms and provisions of this Agreement. Each party hereto shall from time
to time execute and deliver such other agreements, documents or instruments and take such other actions
as may be reasonably necessary or desirable to effectuate the terms of this Agreement.
14. No Waiver. No failure or delay on the part of any party hereto in exercising any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right,
power or remedy hereunder.
15. Equitable Remedies. Each party hereto acknowledges that, to the extent that no adequate
remedy at law exists for breach of its obligations under this Agreement, in the event any party fails to
comply with its obligations hereunder, the aggrieved party shall have the right to obtain specific
performance of the obligations of such defaulting party, injunctive relief, or such other equitable relief as
may be available, other than consequential or punitive damages.
16. Notices. Any notice to be given under this Agreement shall be in writing and shall be
deemed to be given when received by the party to whom it is addressed. Notwithstanding the foregoing, if
any such notice is not received or cannot be delivered due to a change in the address of the receiving party
of which notice was not previously given to the sending party or due to a refusal to accept by the receiving
party, such notice shall be deemed received on the date delivery is attempted. Notices shall be in writing
and sent by certified U.S. mail, hand delivery, or by special courier (in each case, return receipt requested).
Notices to any other party hereto shall be sent to the parties at the following addresses or such other address
or addresses as shall be designated by such party in a written notice to the other parties:
7
If to the Trustee:
The Huntington National Bank, as trustee
525 Vine Street, 14th Floor
Cincinnati, Ohio 45202
Attention: Corporate Trust
If to the Subordinate Lender:
City of Hopkins, Minnesota
1010 First Street South
Hopkins, MN 55343
Attention: City Manager
With a copy to:
Kennedy & Graven, Chartered
150 South 5th Street, Suite 700
Minneapolis, MN 55402
Attention: Scott J. Riggs
If to the Borrower:
Alatus Hopkins LIHTC I LLC
IDS Center
80 South Eighth Street, Suite 4155
Minneapolis, MN 55402
Attention: Robert C. Lux and Chris Osmundson
With copies to:
Winthrop & Weinstine, P.A.
225 South Sixth Street, Suite 3500
Minneapolis, MN 55402
Attention: John M. Stern
and:
Raymond James Tax Credit Fund XX L.L.C.
c/o Raymond James Affordable Housing Investments, Inc.
880 Carillon Parkway
St. Petersburg, Florida 33716
Attention: Steven J. Kropf, President
and:
8
Nixon Peabody LLP
Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Nate Bernard, Esquire
Each notice shall be effective the day delivered if personally delivered, the next Business Day if sent by
overnight courier or three (3) days after being deposited in the United States mail as aforesaid. Rejection
or other refusal to accept or the inability to deliver because of changed address for which no notice was
given shall be deemed to be receipt of the notice sent. Each of the parties hereto shall have the right from
time to time and at any time during the term of this Agreement to change its respective address and the right
to specify as its address any other address within the United States of America.
17. No Third Party Beneficiaries. No person or entity other than the parties hereto and their
respective successors and assigns shall have any rights under this Agreement. To the fullest extent
permitted by applicable law, facsimile or electronically transmitted signatures shall constitute original
signatures for all purposes under this Agreement.
18. Counterparts; Electronic Signatures. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which together shall constitute one and
the same instrument. To the fullest extent permitted by applicable law, facsimile or electronic transmitted
signatures shall constitute original signatures for all purposes under this Agreement.
19. Amendment, Supplement, Modification, Waiver and Termination. No amendment,
supplement, modification, waiver or termination of this Agreement shall be effective against a party against
whom the enforcement of such amendment, supplement, modification, waiver or termination would be
asserted, unless such amendment, supplement, modification, waiver or termination was made in a writing
signed by such party. All amendments shall be made in accordance with any applicable provisions of
Article VIII of the Indenture. This Agreement shall terminate upon the indefeasible payment in full of the
Senior Indebtedness and the release of the Senior Mortgage as a lien on the Property.
20. Severability. In case any one or more of the provisions contained in this Agreement, or
any application thereof, shall be invalid, illegal or unenforceable in any respect, the validity, legality and
other application thereof, shall not in any way be affected or impaired thereby.
21. Governing Law. This Agreement shall be construed in accordance with and governed by
the laws of the State of Minnesota, without giving effect to its conflict of laws principles.
22. Captions. Captions and headings in this Agreement are for convenience of reference only
and shall not define, expand or limit the provisions hereof.
23. Successors and Assigns. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns.
24. Integration. This Agreement sets forth the entire agreement of the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements, written or oral, relating thereto.
25. No Modification. This Agreement shall not be deemed or interpreted so as to expand or
otherwise modify the rights and remedies of the Senior Lender under the Senior Loan Documents or the
9
Subordinate Lender under the Subordinate Loan Documents with respect to the Borrower, or to diminish
or change the obligations of, the Borrower under any of the foregoing.
26. Definitions. Capitalized terms used herein and not defined shall have the meanings
ascribed to such terms in the Indenture.
[The remainder of this page is left intentionally blank.]
S-1
[325 Blake – Subordination Agreement (TOD Grant)]
IN WITNESS WHEREOF, the parties hereto have duly executed and validly delivered this
Subordination Agreement as of the day and year first above written.
ALATUS HOPKINS LIHTC I LLC, a Minnesota limited
liability company
By: Alatus Hopkins LIHTC I MM LLC, a Minnesota limited
liability company, its Managing Member
By: _______________________________
Name: Christian O. Osmundson
Title: Vice President
ACKNOWLEDGMENT
STATE OF MINNESOTA )
)
COUNTY OF HENNEPIN )
On this ____ day of _________________, 2022, before me, _____________________________,
personally appeared Christian O. Osmundson, known to me or proven on the basis of satisfactory evidence
to be the person whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacity as the Vice President of Alatus Hopkins LIHTC I MM LLC,
a Minnesota limited liability company, the managing member of Alatus Hopkins LIHTC I LLC, a Minnesota
limited liability company, and that, by his signature on the instrument, the entity on behalf of which he acted
executed the instrument.
WITNESS my hand and official seal.
________________________________
Notary
My Commission expires:
(SEAL)
S-2
[325 Blake – Subordination Agreement (TOD Grant)]
THE HUNTINGTON NATIONAL BANK, as Trustee
By: __________________________
Name: Tammie Champion
Title: Vice President
ACKNOWLEDGMENT
STATE OF OHIO )
) ss.
COUNTY OF ____________ )
BE IT REMEMBERED, That on this ______ day of _____________, 2022, before me personally
appeared Tammie Champion, to me known, who, being by me duly sworn did say that she is the Vice
President of The Huntington National Bank, a national banking association duly organized and validly
existing under the laws of the United States of America, and said Vice President acknowledged said
instrument to be the free act and deed of said banking association.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal at my
office in the County and State the day and year last above written.
___________________________________
NOTARY PUBLIC
Print Name: ________________________
My Commission Expires:
___________________________
S-3
[325 Blake – Subordination Agreement (TOD Grant)]
CITY OF HOPKINS, MINNESOTA
By
Its Mayor
By
Its City Manager
ACKNOWLEDGMENT
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this ____ day of September, 2022, by Patrick
Hanlon, the Mayor of the City of Hopkins, Minnesota, a municipal corporation of the State of Minnesota, on
behalf of the City of Hopkins, Minnesota.
Notary Public
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this ____ day of September, 2022, by Michael
Mornson, the City Manager of the City of Hopkins, Minnesota, a municipal corporation of the State of
Minnesota, on behalf of the City of Hopkins, Minnesota.
_________________________________
Notary Public
A-1
EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
Real property in the City of Hopkins, County of Hennepin, State of Minnesota, described as follows:
Lot 2, Block 2, Mile 14 On Minnehaha Creek, according to the recorded plat thereof, Hennepin County,
Minnesota.
Torrens Property.
1
______________________________________________________________________________
(above space intentionally left blank for recorder)
MASTER SUBORDINATION AGREEMENT
THIS MASTER SUBORDINATION AGREEMENT (this “Agreement”) is effective as
of the ___ day of _________________, 2022 (the “Effective Date”), and is entered into by and
among HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF
HOPKINS (“Hopkins HRA”), HENNEPIN COUNTY HOUSING AND REDEVELOPMENT
AUTHORITY (“Authority”), CITY OF HOPKINS, MINNESOTA, a municipal corporation of the
State of Minnesota (“LCDA Provider”), ALATUS HOPKINS MD LLC, a Delaware limited
liability company (“Alatus MD”), and ALATUS HOPKINS LIHTC I LLC, a Minnesota limited
liability company (“Borrower”).
RECITALS
A. Borrower has applied for and obtained certain loans from the Authority, the
Hopkins HRA, LCDA Provider, and Alatus MD and have used and/or will use the proceeds of the
loans, together with additional equity, to fund the acquisition, construction and/or rehabilitation of
a multifamily housing development (the “Project”) upon the land (“Land”) legally described on
Exhibit A attached hereto and commonly described as 325 Blake Road.
B. The following is a listing and description of the loans that Borrower has obtained
(collectively, and together with the Alatus MD Loan (as defined below), the “Loans”), the
repayment of such Loans is or will be secured by liens on the Land and the Property, and a listing
of the documents that evidence and secure repayment of such Loans (collectively, and together
with the Alatus MD Loan Documents (as defined below), the “Loan Documents”):
Description of Loans Amounts Loan Documents
Evidencing and
Securing
Repayment of such
Loans
2
A loan to Borrower from
Hopkins HRA through its TIF
Spending Plan Funds from
TIF District 2-11 (the “TIF
Loan”).
Original principal
amount of $3,750,000
Those documents
set forth in Exhibit
B attached hereto
and made a part
hereof (collectively,
the “TIF Loan
Documents”).
A loan to Borrower from
Authority through its
Affordable Housing Incentive
Fund Program (the “AHIF
Loan”).
Original principal
amount of $600,000
Those documents
set forth in Exhibit
C attached hereto
and made a part
hereof (collectively,
the “AHIF Loan
Documents”).
A loan to Borrower from
Authority through its
Affordable Housing
Accelerator Program (the
“Accelerator Loan”)
Original principal
amount of $878,000
Those documents
set forth in Exhibit
D attached hereto
and made a part
hereof (collectively,
the “Accelerator
Loan Documents”).
A loan to Borrower from
LCDA Provider (the “LCDA
Loan”)
Original principal
amount of $220,000
Those documents
set forth in Exhibit
E attached hereto
and made a part
hereof (collectively,
the “LCDA Loan
Documents”).
A loan to Borrower from
Alatus MD (the “Sponsor
Loan”)
Original principal
amount of $[650,000]
Those documents
set forth in Exhibit
F attached hereto
and made a part
hereof (collectively,
the “Sponsor Loan
Documents”).
Alatus MD Loan (as defined
below)
Original principal
amount of $1,000,000
Alatus MD Loan
Documents (as
defined below, and
as set forth in
Exhibit G attached
hereto and made a
part hereof).
C. In addition to the Loans, on or about July 7, 2022, Borrower had previously applied
for and obtained the Senior Loan from Senior Lender, as defined and described below.
3
D. In addition to the Senior Loan, on or about July 7, 2022, Alatus MD loaned
$1,000,000.00 to Borrower (the “Alatus MD Loan”) for Borrower to acquire the Land, as such
Alatus MD Loan is evidenced by that certain Seller Loan Promissory Note made by Borrower to
Alatus MD (“Alatus MD Note”) and secured by that certain Seller Loan Mortgage made by
Borrower in favor of Alatus MD and filed of record with the Hennepin County, Minnesota Office
of the Registrar of Titles on July 21, 2022 as Doc. No. 5960725 (“Alatus MD Mortgage” and
together with the Alatus MD Note and any other documents set forth in Exhibit E attached hereto
and made a part hereof, collectively, the “Alatus MD Loan Documents”).
E. The parties intend that the Loans, the corresponding Loan Documents, and other
documents referred to herein and liens created by the Loan Documents and other documents
referred to herein have a certain order of priority, and the parties wish to specify how the terms
and conditions contained in the Loan Documents will be interpreted in the event of a conflict or
inconsistency.
MASTER SUBORDINATION AGREEMENT
NOW, THEREFORE, in consideration of good and valuable consideration, and in
further consideration of the parties making and entering into the Loans, the parties to this
Agreement agree as follows:
1. Definitions. For purposes of this Agreement, the definitions set forth above in the
preamble paragraph and Recitals are incorporated into this Section 1 by reference, and the
following terms have the meanings set out respectively after each term, and its meaning is equally
applicable to both the singular and plural forms of the term defined:
a. “Bankruptcy Proceedings” means any bankruptcy, reorganization,
insolvency, composition, restructuring, dissolution, liquidation, receivership, assignment
for the benefit of creditors, or custodianship action or proceeding under any federal or state
law with respect to Borrower, any guarantor of any of the Loan Documents, any of their
respective properties, or any of their respective partners, members, officers, directors, or
shareholders.
b. “Senior Lender” means, collectively, (i) City of Hopkins, Minnesota, as
“Issuer”, and (ii) The Huntington National Bank, a national banking association, as
“Trustee”, together with their respective successors and/or assigns, as their interests may
respectively appear.
c. “Senior Loan” means the loan by Senior Lender to Borrower, pursuant to
the terms of a Loan Agreement dated as of July 1, 2022 (“First Loan Agreement”) by and
between Issuer and Borrower, of the proceeds of those certain $19,930,000 Multifamily
Housing Revenue Bonds (325 Blake Apartments), Series 2022A, and $5,840,000 Taxable
Multifamily Housing Revenue Bonds (325 Blake Apartments), Series 2022B (collectively,
the “Bonds”), issued by Issuer pursuant to an Indenture of Trust dated as of July 1, 2022
(“First Indenture”) by and between Issuer and Trustee.
4
d. “Senior Loan Documents” means, collectively, the First Loan Agreement,
the Bonds, the First Indenture, those certain two (2) promissory notes each dated July 7,
2022 and each from Borrower to Issuer, as endorsed by Issuer to Trustee (collectively, the
“First Notes”), that certain Mortgage, Assignment of Rents, Security Agreement and
Fixture Financing Statement dated as of July 1, 2022 from Borrower to Issuer and filed of
record with the Hennepin County, Minnesota Office of the Registrar of Titles on July 21,
2022 as Doc. No. 5960721, as assigned by Issuer to Trustee pursuant to that certain
Assignment of Mortgage dated July 7, 2022 and filed of record with the Hennepin County,
Minnesota Office of the Registrar of Titles on July 21, 2022 as Doc. No. 5960724
(collectively, “First Mortgage”), that certain Assignment of Leases, Rents and Other
Income dated as of July 1, 2022 from Borrower to Trustee and filed of record with the
Hennepin County, Minnesota Office of the Registrar of Titles on July 21, 2022 as Doc. No.
5960722, that certain UCC Financing Statement naming Borrower, as debtor, and Trustee,
as secured party, and filed of record with the Hennepin County, Minnesota Office of the
Registrar of Titles on July 21, 2022 as Doc. No. 5960723, that certain Regulatory
Agreement dated July 7, 2022 by and between Issuer, Borrower, and Trustee and filed of
record with the Hennepin County, Minnesota Office of the Registrar of Titles on July 21,
2022 as Doc. No. 5960720, the Senior Loan Subordination Agreements, and all other
documents, instruments, and agreements evidencing, governing, securing or otherwise
related to the Senior Loan.
e. “Senior Loan Subordination Agreements” means, collectively, those certain
(i) Subordination Agreement dated as of July 1, 2022 by and between Borrower, Trustee,
and Alatus MD, and filed of record with the Hennepin County, Minnesota Office of the
Registrar of Titles on July 21, 2022 as Doc. No. 5960726; (ii) Subordination Agreement
dated as of [September] 1, 2022 by and between Borrower, Trustee, and Authority, and
filed of record with the Hennepin County, Minnesota Office of the Registrar of Titles on
or about the date hereof; (iii) Subordination Agreement dated as of [September] 1, 2022 by
and between Borrower, Trustee, and Authority, and filed of record with the Hennepin
County, Minnesota Office of the Registrar of Titles on or about the date hereof; (iv)
Subordination Agreement dated as of [September] 1, 2022 by and between Borrower,
Trustee, and Hopkins HRA, and filed of record with the Hennepin County, Minnesota
Office of the Registrar of Titles on or about the date hereof; (v) Subordination Agreement
dated as of [September] 1, 2022 by and between Borrower, Trustee, and LCDA Provider,
and filed of record with the Hennepin County, Minnesota Office of the Registrar of Titles
on or about the date hereof; and (vi) Subordination Agreement dated as of [September] 1,
2022 by and between Borrower, Trustee, and Alatus MD, and filed of record with the
Hennepin County, Minnesota Office of the Registrar of Titles on or about the date hereof.
2. Consent to Loans, Liens and Encumbrances. The parties agree and consent to the
Senior Loan and all of the Loans, and agree that all of the liens and encumbrances created by the
Senior Loan Documents and the respective Loan Documents are deemed to be permitted
encumbrances under their respective Loan Documents. The parties further agree to execute any
and all documents that Senior Lender or any party to this Agreement may reasonably request in
order to document that the liens and encumbrances are permitted encumbrances under their
respective Loan Documents.
5
3. Use of Loan Documents. The parties agree and consent to the use of the Loan
Documents set forth in the attached exhibits in conjunction with the Loan referenced in each
exhibit, respectively. In addition, each party, as to the respective Loan Documents that correspond
to one of its Loans, does hereby covenant, warrant, consent and agree that (i) the described Loan
Documents are all of the documents that the party has entered into regarding the corresponding
Loan, (ii) there are no documents relating to its Loan other than the described Loan Documents
for its Loan, (iii) it will not enter into any other document for its Loan that would adversely impact
any other party or parties to this Agreement without the prior written consent of the party or parties
(excluding documentation of amounts having been advanced by a party for the protection of its
security interest or lien priority pursuant to the Loan Documents), (iv) any existing document or
documents that may come into existence in the future to which a party is or becomes a party or
from which a party obtains a benefit that is different from the benefits that the other parties have
received or will receive, and that is not listed in the Loan Documents set forth in this Agreement
for the Loan, will be of no force or effect until approved and consented to in writing by all of the
parties to this Agreement upon which the document has, or will have, an adverse effect (excluding
documentation of amounts having been advanced by a party for the protection of its security
interest or lien priority pursuant to the Loan Documents), and upon written approval, the
documents will automatically be considered to be included in the exhibit to this Agreement setting
forth the Loan Documents for the Loan. The other parties to this Agreement will execute any
document that may reasonably be requested in order to include the document in the exhibit.
4. Subordination of Loans and Loan Documents.
a. Loan Priority. Except as specifically provided below, each party agrees to
the following priority of the Loan Documents and any and all of the liens and
encumbrances created by the Loan Documents and subordinates its respective Loan
Documents and the liens and encumbrances created by its respective Loan Documents to
those Loan Documents and liens and encumbrances created by the Loan Documents that
are listed as having a priority over its Loan Documents and the liens and encumbrances
created by its respective Loan Documents:
Loan Documents and Liens
and Encumbrances Created
by the Loan Documents
Party to the Loan
Documents and Holder of
Liens and Encumbrances
Created by the Loan
Documents
Order of Priority
Senior Loan Documents Senior Lender First
TIF Loan Documents Hopkins HRA Second
AHIF Loan Documents Authority Third
Accelerator Loan Documents Authority Fourth
LCDA Loan Documents LCDA Provider Fifth
Alatus MD Loan Documents Alatus MD Sixth
Sponsor Loan Documents Alatus MD Seventh
6
b. The parties acknowledge that the Project is intended to receive the benefits
of Low Income Housing Tax Credits (the "Credits") pursuant to Section 42 of the Internal
Revenue Code ("Section 42") and that it is a condition of the receipt of the Credits that
Borrower file a Declaration of Land Use Restrictive Covenants for Low-Income Housing
Credits (the "Tax Credit Declaration"). The parties consent to the terms of the Tax Credit
Declaration and agree that the Tax Credit Declaration is subordinate to each of their Loans
and the related Loan Documents, except to the extent otherwise required by the Tax Credit
Declaration (relating to the three-year vacancy control during the extended use period).
c. Notwithstanding any other provision in this Agreement to the contrary, the
parties acknowledge and agree that this Agreement is subject and subordinate to the Senior
Loan Subordination Agreements and all of the Senior Loan Documents.
5. Interpretation. The parties are entering into and executing this Agreement in order
to establish the subordination and priority of the Loan Documents and any liens and encumbrances
created by the Loan Documents, and, accordingly, the parties agree, understand, and acknowledge
that the enforceability of this Agreement is not, and will not be, restricted, limited, or impaired by
the fact that not all of the parties to this Agreement are signatories to each or any of the Loan
Documents.
6. Most Restrictive Requirements. Notwithstanding the order of priority and
subordinations granted in this Agreement, the Borrower will comply not only with the Loan
Documents having first priority but with all Loan Documents. For example, if a party's Loan
Documents contain rent, income or occupancy requirements that are more restrictive than Loan
Documents that are more senior in priority, then the Borrower will comply with the more restrictive
Loan Documents for as long as they remain in effect.
7. Absence of Events of Default and Compliance with Closing Requirements. Each
party states, represents, and warranties that as to each of its respective Loans, (i) its Loans have
been duly closed, (ii) there are no events of default, or events that with the passage of time could
constitute an event of default, currently existing with respect to any of its Loans, and (iii) all of its
Loans are in good standing.
8. Notice of Default and Cure Rights. Each party will deliver to the other parties a
default notice within five (5) business days in each case where a party has given a default notice
to Borrower (provided that each party will have no liability to any party for failure to timely give
notice). Failure of the notifying party to send a default notice to the other parties will not prevent
the exercise of the notifying party’s rights and remedies under the Loan Documents, subject to the
provisions of this Agreement. The other parties will have the opportunity, but not the obligation,
to cure any default within sixty (60) days following the date of the notice; provided, however that
the notifying party will be entitled, during the sixty (60) day period, to continue to pursue its rights
and remedies under the Loan Documents.
9. Use of Insurance and Condemnation Proceeds. Notwithstanding any provisions to
the contrary contained in this Agreement or in any of the Loan Documents, the parties agree that
any and all insurance and/or condemnation proceeds will be used first to repair or reinstate the
7
Project. If there are any remaining proceeds, or if the amounts are insufficient to repair or reinstate
the Project, or if the Project cannot be repaired or reinstated, then the proceeds will be used to pay
off the Loans in order of the priority of the Loan Documents specified in this Agreement.
10. Agreement Not to Commence Bankruptcy Proceedings. The parties agree that
during the term of this Agreement they will not commence, or join with any other creditor in
commencing, any Bankruptcy Proceeding with respect to Borrower, without the other parties’
prior written consents.
11. Survival of Termination. The terms of this Agreement will continue, and will
survive the termination of this Agreement, if any payment under the Loan Documents (whether by
or on behalf of Borrower, as proceeds of security or enforcement of any right of set-off or
otherwise) is for any reason repaid or returned to Borrower or its insolvent estate, or avoided, set
aside or required to be paid to Borrower, a trustee, receiver or other similar party under any
bankruptcy, insolvency, receivership or similar law. In the event, any or all of the Loans originally
intended to be satisfied will be deemed to be reinstated and outstanding to the extent of any
repayment, return, or other action, as if the payment had not been made.
12. Notices. Any notice required to be given to any party pursuant to this Agreement
shall be in writing and shall be deemed duly given (i) on the date of personal delivery, (ii) one
business day following dispatch by Federal Express or equivalent, or (iii) three (3) business days
after mailing certified mail, postage prepaid, return receipt requested, to the respective addresses
of the parties set out below:
If to Borrower:
ALATUS HOPKINS LIHTC I LLC
c/o Alatus LLC
80 South Eighth Street, Suite 4155
Minneapolis, MN 55402
Attention: Robert C. Lux and Chris Osmundson
With copies to:
Winthrop & Weinstine, P.A.
225 South Sixth Street, Suite 3500
Minneapolis, MN 55402
Attention: John M. Stern
and:
8
Raymond James Tax Credit Fund XX L.L.C. (the “Investor Member” of
Borrower)
c/o Raymond James Tax Credit Funds, Inc.
880 Carillon Parkway
St. Petersburg, Florida 33716
Attention: Steven J. Kropf, President
and:
Nixon Peabody LLP
Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Nate Bernard, Esq.
If to Hopkins HRA:
Housing and Redevelopment Authority in and for the City of Hopkins
1010 1st Street South
Hopkins, MN 55343
Attn: Executive Director
With a copy to:
Kennedy & Graven, Chartered
150 South 5th Street, Suite 700
Minneapolis, MN 55402
Attn: Scott J. Riggs
If to Authority:
Hennepin County Housing and Redevelopment Authority
701 Fourth Avenue South, Suite 400
Minneapolis, MN 55415
If to LCDA Provider:
City of Hopkins, Minnesota
1010 First Street South
Hopkins, MN 55343
Attn: City Manager
With a copy to:
9
Kennedy & Graven, Chartered
150 South 5th Street, Suite 700
Minneapolis, MN 55402
Attn: Scott J. Riggs
If to Alatus MD:
ALATUS HOPKINS MD LLC
c/o Alatus LLC
80 South Eighth Street, Suite 4155
Minneapolis, MN 55402
Attention: Robert C. Lux and Chris Osmundson
With copies to:
Winthrop & Weinstine, P.A.
225 South Sixth Street, Suite 3500
Minneapolis, MN 55402
Attention: John M. Stern
13. Execution in Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be an original but all of which will constitute one instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE AND ACKNOWLEDGMENT PAGES FOLLOW]
24601352v3
15056.22
SIGNATURE PAGE – MASTER SUBORDINATION AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Master Subordination Agreement
effective as of the Effective Date first written above.
BORROWER:
ALATUS HOPKINS LIHTC I LLC,
a Minnesota limited liability company
By: Alatus Hopkins LIHTC I MM LLC,
a Minnesota limited liability company
Its: Managing Member
By: ____________________________
Name: Christian B. Osmundson
Its: Vice President
STATE OF MINNESOTA )
) ss.
COUNTY OF ____________ )
The foregoing instrument was acknowledged before me this _____ day of
______________2022, by Christian B. Osmundson, the Vice President of Alatus Hopkins LIHTC
I MM LLC, a Minnesota limited liability company, the Managing Member of Alatus Hopkins
LIHTC I LLC, a Minnesota limited liability company, on behalf of the limited liability company.
Notary Public
SIGNATURE PAGE – MASTER SUBORDINATION AGREEMENT
HOPKINS HRA:
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY OF
HOPKINS
By: ____________________________
Name: Patrick Hanlon
Its: Chair
By: ____________________________
Name: Michael Mornson
Its: Executive Director
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _____ day of September,
2022, by Patrick Hanlon, the Chair of the Housing and Redevelopment Authority in and for the
City of Hopkins, on behalf of the authority.
Notary Public
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _____ day of September,
2022, by Michael Mornson, the Executive Director of the Housing and Redevelopment Authority
in and for the City of Hopkins, on behalf of the authority.
Notary Public
SIGNATURE PAGE – MASTER SUBORDINATION AGREEMENT
AUTHORITY:
HENNEPIN COUNTY HOUSING AND
REDEVELOPMENT AUTHORITY,
a public body corporate and politic of the State of
Minnesota
APPROVED AS TO FORM
_____________________________ By:
Assistant County Attorney Vice Chair of its Board
Date: ________________________
Attest:
Deputy/Clerk of the County Board
By: ______________________________________
Executive Director
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this ___ day of ____________, 2022, by
_________________________________, the Vice Chair of the Board of the Hennepin County Housing
and Redevelopment Authority, a public body corporate and politic, on behalf of the Authority.
Notary Public
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this ___ day of ____________, 2022, by
____________________ the Executive Director of the Hennepin County Housing and Redevelopment
Authority, a public body corporate and politic, on behalf of the Authority.
Notary Public
RECOMMENDED FOR APPROVAL:
______________________________
Deputy Executive Director
Date: _________________________
SIGNATURE PAGE – MASTER SUBORDINATION AGREEMENT
LCDA PROVIDER:
CITY OF HOPKINS, MINNESOTA
By: ____________________________
Name: Patrick Hanlon
Its: Mayor
By: ____________________________
Name: Michael Mornson
Its: City Manager
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _____ day of September,
2022, by Patrick Hanlon, the Mayor of the City of Hopkins, Minnesota, on behalf of the city.
Notary Public
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _____ day of September,
2022, by Michael Mornson, the City Manager of the City of Hopkins, Minnesota, on behalf of the
city.
Notary Public
SIGNATURE PAGE – MASTER SUBORDINATION AGREEMENT
ALATUS MD:
ALATUS HOPKINS MD LLC,
a Minnesota limited liability company
By: ____________________________
Name: Christian B. Osmundson
Its: Vice President
STATE OF MINNESOTA )
) ss.
COUNTY OF ____________ )
The foregoing instrument was acknowledged before me this _____ day of
______________2022, by Christian B. Osmundson, the Vice President of Alatus Hopkins MD
LLC, a Minnesota limited liability company, on behalf of the limited liability company.
Notary Public
This document drafted by, and
after recording return to:
WINTHROP & WEINSTINE, P.A. (JMS)
225 South Sixth Street, Suite 3500
Minneapolis, MN 55402
(612) 604-6400
A-1
EXHIBIT A
LEGAL DESCRIPTION
Real property in the City of Hopkins, County of Hennepin, State of Minnesota, described as
follows:
Lot 2, Block 2, Mile 14 On Minnehaha Creek, according to the recorded plat thereof, Hennepin
County, Minnesota.
Torrens Property.
B-1
EXHIBIT B
HOPKINS HRA TIF LOAN DOCUMENTS
1. Loan Agreement by and between Borrower and Hopkins HRA.
2. Promissory Note in the principal amount of $3,750,000 made by Borrower in favor of the
Hopkins HRA.
3. Mortgage securing a principal indebtedness of $3,750,000 granted by Borrower in favor
in of the Hopkins HRA.
4. Declaration of Restrictive Covenants granted by Borrower in favor of the Hopkins HRA.
5. Minimum Assessment Agreement (Phase IA – Building A) by and between Borrower and
the Hopkins HRA, and certified by the County Assessor.
C-1
EXHIBIT C
AHIF LOAN DOCUMENTS
1. Consolidated Loan Agreement by and between the Authority and Borrower relating to the
loan of proceeds from the Authority’s Affordable Housing Incentive Fund.
2. Promissory Note in the principal amount of $600,000 made by Borrower in favor of the
Authority.
3. Combination Mortgage, Assignment of Rents, Security Agreement, and Fixture Financing
Statement securing a principal indebtedness of $600,000 granted by Borrower in favor in
of the Authority.
4. Declaration of Covenants and Restrictions regarding the AHIF Loan granted by Borrower
in favor of the Authority.
D-1
EXHIBIT D
ACCELERATOR LOAN DOCUMENTS
1. Consolidated Loan Agreement by and between the Authority and Borrower relating to the
loan of proceeds from the Authority’s Affordable Housing Accelerator.
2. Promissory Note in the principal amount of $878,000 made by Borrower in favor of the
Authority.
3. Combination Mortgage, Assignment of Rents, Security Agreement, and Fixture Financing
Statement securing a principal indebtedness of $878,000 granted by Borrower in favor in
of the Authority.
4. Declaration of Covenants and Restrictions regarding the Accelerator Loan granted by
Borrower in favor of the Authority.
E-1
EXHIBIT E
LCDA LOAN DOCUMENTS
1. Loan Agreement by and between the LCDA Provider and Borrower relating to the loan of
proceeds from the Livable Communities Demonstration Account (LCDA) grant.
2. Note in the principal amount of $220,000 made by Borrower in favor of the LCDA
Provider.
3. Combination Mortgage and Security Agreement securing a principal indebtedness of
$220,000 granted by Borrower in favor in of the LCDA Provider.
F-1
EXHIBIT F
SPONSOR LOAN DOCUMENTS
1. Sponsor Loan Promissory Note in the principal amount of $[650,000] made by Borrower
in favor of Alatus MD.
2. Sponsor Loan Mortgage made by Borrower in favor of Alatus MD.
G-1
EXHIBIT G
ALATUS MD LOAN DOCUMENTS
1. Seller Loan Promissory Note in the principal amount of $1,000,000 made by Borrower in
favor of Alatus MD.
2. Seller Loan Mortgage made by Borrower in favor of Alatus MD and filed of record with
the Hennepin County, Minnesota Office of the Registrar of Titles on July 21, 2022 as
Doc. No. 5960725.
1
MASTER LOAN DISBURSING AGREEMENT
THIS MASTER LOAN DISBURSING AGREEMENT (this “Agreement”) is
effective as of the _____ day of September, 2022 (the “Effective Date”), by and between
FIRST AMERICAN TITLE INSURANCE COMPANY (“Escrow Agent”), HOUSING
AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF HOPKINS
(“Hopkins HRA”), HENNEPIN COUNTY HOUSING AND REDEVELOPMENT
AUTHORITY (“Authority”), CITY OF HOPKINS, MINNESOTA, a municipal
corporation of the State of Minnesota (“LCDA Provider”), ALATUS HOPKINS MD
LLC, a Delaware limited liability company (“Alatus MD”), and ALATUS HOPKINS
LIHTC I LLC, a Minnesota limited liability company (“Borrower”).
RECITALS
WHEREAS, Borrower has applied for and obtained certain loans from the
Authority, Hopkins HRA, LCDA Provider, and Alatus MD (individually and collectively,
as the context requires, the “Lender”) and will use the proceeds of the loans and
additional equity to fund the construction and/or rehabilitation of a multifamily housing
development (the “Project”) upon the land (“Land”) legally described on Exhibit A
attached hereto and commonly described as 325 Blake Road; and
WHEREAS, the following is a listing and description of certain loans that
Borrower has obtained (collectively and excluding the Equity (as defined below), the
“Loans”) and the Equity (as defined below) that Borrower will use to fund the
construction and/or rehabilitation of the Project (collectively, the “Project Funds”):
Description of Project Funds Amount
A loan to Borrower from Hopkins HRA
through its TIF Spending Plan Funds from
TIF District 2-11 (the “TIF Loan”), none of
which has been disbursed as of the
Effective Date.
Original principal amount
of $3,750,000
A loan to Borrower from Authority through
its Affordable Housing Incentive Fund
Program (the “AHIF Loan”), none of
which has been disbursed as of the
Effective Date.
Original principal amount
of $600,000
A loan to Borrower from Authority through
its Affordable Housing Accelerator
Program (the “Accelerator Loan”), none of
which has been disbursed as of the
Effective Date.
Original principal amount
of $878,000
2
A loan to Borrower from LCDA Provider
through its Livable Communities
Demonstration Account (LCDA) grant (the
“LCDA Loan”), none of which has been
disbursed as of the Effective Date.
Original principal amount
of $220,000
A loan to Borrower from Alatus MD (the
“Sponsor Loan”), none of which has been
disbursed as of the Effective Date.
Original principal amount
of $[650,000]
Funds to be supplied by Borrower
(“Equity”), [$_____] of which has been
disbursed as of the Effective Date.
$[REMAINING
EQUITY]
WHEREAS, each Lender has entered into respective agreements with Borrower
and/or Title Company regarding the disbursement of respective Project Funds.
WHEREAS, Hopkins HRA, Authority, LCDA Provider, Alatus MD, and
Borrower have agreed that the Project Funds are to be disbursed in a certain order of
priority, and now wish to establish how the Project Funds are to be disbursed and the
order of priority for such disbursements.
WHEREAS, Hopkins HRA, Authority, LCDA Provider, Alatus MD, and
Borrower have requested that Escrow Agent disburse the Project Funds, and Escrow
Agent is willing to do so pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Loan Advances. At the request of Borrower, each Lender will respectively
deposit with Escrow Agent, from time to time, undisbursed proceeds of the respective
Loans available for disbursement (“Advance(s)”).
2. Equity. All Equity shall be deposited with and disbursed by Escrow
Agent. Subject to satisfaction of all terms and conditions of this Agreement and the
respective documents evidencing and governing the Loans, any amounts payable
pursuant to a draw request for work completed in connection with the construction and/or
rehabilitation of the Project shall be paid from Equity until all Equity has been depleted.
At the time of a submission of a draw request, Borrower shall deliver (a) to Escrow
Agent and each Lender a request to fund Equity (“Request to Pay Equity”); and (b) to
Escrow Agent an amount of Equity equal to the amount stated in such draw request.
Provided that all conditions of disbursement stated below are satisfied and upon the
approval of each respective Lender, Escrow Agent shall disburse such Equity in
accordance with the applicable approved Request to Pay Equity, less any required
retainage.
3
3. Purpose of Disbursements. Escrow Agent is authorized and directed to
disburse Advances and Equity deposited pursuant to this Agreement to pay costs of
construction and/or rehabilitation of the Project pursuant to statements of amounts due,
which must be approved by Borrower and each Lender.
4. Order of Priority for Disbursement of Project Funds. Hopkins HRA,
Authority, LCDA Provider, Alatus MD, and Borrower agree that the Escrow Agent has
already been, or will be from time to time, supplied with the Project Funds and must
disburse the Project Funds in the following order:
Source of Project Funds Order of Disbursement
Equity First
TIF Loan Second
AHIF Loan Third
Accelerator Loan Fourth
LCDA Loan Fifth
Sponsor Loan Sixth
When Borrower desires the disbursement of any or all of the Project Funds
referred to in this paragraph 4, it will submit a draw request to the appropriate and
respective party, consisting of Hopkins HRA, Authority, LCDA Provider, Alatus
MD, or Borrower, that is supplying such Project Funds, and if such draw request
meets the provisions contained in such applicable party’s documents and all other
requirements imposed by such documents and this Agreement have been satisfied,
then such applicable party, consisting of Hopkins HRA, Authority, LCDA
Provider, Alatus MD, or Borrower, will approve the draw request and forward
such approval to Escrow Agent for authorization of disbursement of the
respective Project Funds under this Agreement. Hopkins HRA, Authority, LCDA
Provider, Alatus MD, and Borrower agree that the Project Funds must be
disbursed in the order indicated above and that none of the proceeds of a source of
Project Funds will be disbursed until all of the proceeds of source(s) of Project
Funds that are to be disbursed prior thereto have been disbursed. Hopkins HRA,
Authority, LCDA Provider, Alatus MD, and Borrower further direct Escrow
Agent to disburse the Project Funds in the order indicated, and Escrow Agent
agrees to comply with such direction.
Notwithstanding the above order of disbursement, Hopkins HRA, Authority,
LCDA Provider, Alatus MD, and Borrower agree that if Project Funds from any
one of the sources (the “Original Funding Source”) are unavailable due to (a) the
requirements of the documents governing the eligible uses of such Original
Funding Source and/or (b) certain conditions for disbursement of such Project
Funds from the Original Funding Source that have not yet been met, subject to the
terms of such Original Funding Source party’s documents, Project Funds from the
next source of Project Funds in the order above will be made available for
disbursement, but only to the extent the Original Funding Source is unavailable.
4
5. Conditions of Initial Disbursement. Prior to the initial disbursement of
Advances and/or Equity hereunder, Borrower shall submit to Escrow Agent the
following:
a. A Project Cost Statement listing all of the hard and soft costs relating to the
Project to be paid with Borrower’s equity and the Loans;
b. A Sworn Construction Statement disclosing the name of each person,
corporation or other entity which has a contract or subcontract under which
payment may be required for any work done, material supplied or services
furnished in connection with acquiring, constructing, financing, equipping
and/or developing the Project, including project managers, architects,
engineers and surveyors (“Contractors”), and the amount of such contract; and
c. If requested by either Lender or Escrow Agent, a copy of each contract with
each of the Contractors.
6. Conditions of Disbursement. The Borrower may obtain Advances for
disbursement to Contractors only to the extent of the amount of the contract work
completed or materials supplied to the Project by each such Contractor in accordance
with its contract, less any required retainage, and the Borrower agrees that all sums
requested hereunder for disbursement to each Contractor shall not exceed that amount.
Prior to the disbursement of an Advance, Escrow Agent must be furnished with the
following items via disbursing.mn@firstam.com (collectively, the “Documents”):
a. An updated Sworn Construction Statement setting forth the Contractors,
subcontractors and suppliers, the amount of each contract, the amount paid to
date, the amount being requested, and the balances due (Exhibit B);
b. An updated Project Cost statement reflecting all financial sources and uses,
i.e. the amount paid to date, the amount being requested, and the sources/costs
remaining;
c. A draw request signed by Borrower for the requested disbursement;
d. Written approval by each Lender of the relevant draw request, along with
authorization to disburse the Advance;
e. Sufficient funds to cover the requested disbursement;
f. Additional equity deposit, if any, required pursuant to Paragraph 10 hereof;
g. Sufficient funds to cover unpaid title and escrow charges;
h. Unconditional, up to date lien waivers executed by each Contractor, to which
any portion of the immediately preceding advance (“Prior Advance”) of
5
proceeds was paid, covering liens for all work done and materials supplied for
which disbursement was made from the Prior Advance, in form satisfactory to
Escrow Agent; and,
i. Invoices, affidavits, or substantiated evidence of payment as may be requested
by Escrow Agent or Lender to establish the cost or value of the items or
improvements for which disbursement is to be or has been made.
j. With the final draw request, an updated Sworn Construction Statement,
inclusive of all change orders, together with full and final lien waivers from
each Contractor for all work done and materials supplied for which payment
has been made in full.
7. Mechanics’ Liens. Upon receipt of the draw request, Escrow Agent will
order a search of the Hennepin County records for the presence of any mechanics liens. If
a title search reveals a mechanics lien, Escrow Agent will notify Borrower and each
Lender via email and may discontinue disbursement until the encumbrance has been
disposed of to Escrow Agent’s satisfaction. The search and notification will be limited
exclusively to mechanics liens of record and no other matters of title will be addressed.
Each Lender, respectively, will be furnished with an ALTA 33 disbursements
endorsement stating search results and the record date at that time (Exhibit C).
8. Review of Documents. Not later than 10 business days following receipt
of the Documents, Escrow Agent will notify each Lender via email as to the sufficiency
of the delivered Documents. If the Documents are satisfactory to the Escrow Agent,
Escrow Agent will notify each Lender via email. Upon each Lender’s approval, each
Lender will (on the requested date of disbursement) transmit to Escrow Agent the
respective Advance in the respective amount of the disbursement applied for in the
relevant draw request (or so much thereof as such Lender may approve), by transfer of
such funds to Escrow Agent for deposit in Escrow Agent’s Account No. 3017240000
maintained with First American Trust, FSB, 5 First American Way, Santa Ana,
California, ABA No. 122241255.
9. Disbursement of Funds. Upon receiving the respective Advance
transmitted by each Lender and/or the respective Equity, Escrow Agent will disburse the
amounts shown in the relevant draw request (or such lesser amounts if directed by such
Lender) directly to the general contractor and sub-contractors and other party identified in
the relevant draw request, or, at the discretion of the Escrow Agent, directly to the
general contractor.
10. Additional Equity Deposits. If at any time it is determined that the amount
required to pay all remaining and unpaid costs and expenses in connection with the
completion of the Project exceeds the amount of the undisbursed Project Funds available
under the Loans and Equity, Borrower shall deposit with Escrow Agent funds from
sources other than the proceeds of the Loans and Equity sufficient to pay for the excess
costs. In no event shall Project Funds available under the Loans and Equity be disbursed
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if the unpaid costs and expenses in connection with the completion of the Project exceed
the amount of the undisbursed Project Funds available under the Loans and Equity.
11. No Interest on Funds. Escrow Agent shall not be liable for interest on
funds or Advances deposited with it.
12. Records. Escrow Agent will keep and maintain books and records in
sufficient detail to reflect the disbursements made by it pursuant to this Agreement. Each
Lender and Borrower may during normal business hours examine the books and records
of Escrow Agent pertaining to those disbursements.
13. Duties of Escrow Agent. Functions and duties assumed by Escrow Agent
include only those described in this Agreement, and Escrow Agent is not obligated to act
except in accordance with the terms and conditions of this Agreement. Escrow Agent
does not insure that the Project will be completed, nor that any improvements for the
Project will be in accordance with the plans and specifications, nor that sufficient funds
will be available for the completion of the Project. Escrow Agent may conclusively rely
upon and shall be protected in acting upon any document believed by Escrow Agent to be
genuine and to have been signed or presented by the proper parties, consistent with
reasonable due diligence on Escrow Agent’s part.
14. Custody of Documents. Escrow Agent shall not be responsible for any
loss of documents, Advances or funds while such items are not in its custody.
Documents, Advances or funds which are deposited in the United States mail shall not be
construed as being in the custody of Escrow Agent.
15. Fees. Hopkins HRA, Authority, LCDA Provider, Alatus MD, and
Borrower contemplate ____________ draws will occur for the Project. Escrow Agent’s
fee for disbursement shall be $500.00 per draw, with an initial prepayment made by
Borrower of $ _____________. Additional disbursement fees will be charged against the
Borrower for any draws in excess of ___ draws. Escrow Agent reserves the right to
charge additional fees should circumstances warrant extraordinary services on the part of
the Escrow Agent.
16. First Mortgage Loan Disbursements. The parties hereto acknowledge the
following:
a. On or about July 7, 2022, the City of Hopkins, Minnesota (“Issuer”) issued
those certain $19,930,000 Multifamily Housing Revenue Bonds (325 Blake
Apartments), Series 2022A, and $5,840,000 Taxable Multifamily Housing
Revenue Bonds (325 Blake Apartments), Series 2022B (collectively, the
“Bonds”), pursuant to an Indenture of Trust dated as of July 1, 2022 (“First
Indenture”) by and between Issuer and The Huntington National Bank, a
national banking association (“Trustee”), the proceeds of which Bonds were
loaned to Borrower (the “First Loan”) pursuant to the terms of a Loan
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Agreement dated as of July 1, 2022 (“First Loan Agreement”) by and between
Issuer and Borrower;
b. Borrower’s obligations to repay the First Loan are evidenced by two (2)
promissory notes each dated July 7, 2022 and each from Borrower to Issuer,
as endorsed by Issuer to Trustee (collectively, the “First Notes”), which Notes
are secured in part by a first-priority mortgage lien on the Land granted
pursuant to a Mortgage, Assignment of Rents, Security Agreement and
Fixture Financing Statement dated as of July 1, 2022 from Borrower to Issuer,
as assigned by Issuer to Trustee (“First Mortgage”);
c. Pursuant to the First Indenture and First Loan Agreement, Red Stone Servicer,
LLC, a Delaware limited liability company (“Controlling Person”) and the
Trustee are responsible for advances and disbursements of First Loan
proceeds, and neither Issuer, Trustee, nor Controlling Person has entered into
any disbursement agreement with Borrower, Escrow Agent, or any other
person with respect to disbursements of First Loan proceeds;
d. Borrower and Escrow Agent have entered or will enter into an Agreement for
Mechanic’s Lien Endorsement (“First Loan Title Agreement”).
17. Miscellaneous.
a. This Agreement shall be binding upon the parties hereto and their respective
successors and assigns.
b. This Agreement can be amended or modified only by a written amendment
signed by the parties hereto.
c. Any notice required to be given to Borrower, Authority, Hopkins HRA,
Alatus MD, or Escrow Agent pursuant to this Agreement shall be in writing
and shall be deemed duly given (i) on the date of personal delivery, (ii) one
business day following dispatch by Federal Express or equivalent, or (iii)
three (3) business days after mailing certified mail, postage prepaid, return
receipt requested, to the respective addresses of the parties set out below:
If to Borrower:
ALATUS HOPKINS LIHTC I LLC
c/o Alatus LLC
80 South Eighth Street, Suite 4155
Minneapolis, MN 55402
Attention: Robert C. Lux and Chris Osmundson
With copies to:
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Winthrop & Weinstine, P.A.
225 South Sixth Street, Suite 3500
Minneapolis, MN 55402
Attention: John M. Stern
and:
Raymond James Tax Credit Fund XX L.L.C. (the “Investor Member” of
Borrower)
c/o Raymond James Tax Credit Funds, Inc.
880 Carillon Parkway
St. Petersburg, Florida 33716
Attention: Steven J. Kropf, President
and:
Nixon Peabody LLP
Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Nate Bernard, Esq.
If to Hopkins HRA:
Housing and Redevelopment Authority in and for the City of Hopkins
1010 1st Street South
Hopkins, MN 55343
Attn: Executive Director
With a copy to:
Kennedy & Graven, Chartered
150 South 5th Street, Suite 700
Minneapolis, MN 55402
Attn: Scott J. Riggs
If to Authority:
Hennepin County Housing and Redevelopment Authority
701 Fourth Avenue South, Suite 400
Minneapolis, MN 55415
If to LCDA Provider:
City of Hopkins, Minnesota
1010 First Street South
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Hopkins, MN 55343
Attn: City Manager
With a copy to:
Kennedy & Graven, Chartered
150 South 5th Street, Suite 700
Minneapolis, MN 55402
Attn: Scott J. Riggs
If to Alatus MD:
ALATUS HOPKINS MD LLC
c/o Alatus LLC
80 South Eighth Street, Suite 4155
Minneapolis, MN 55402
Attention: Robert C. Lux and Chris Osmundson
With copies to:
Winthrop & Weinstine, P.A.
225 South Sixth Street, Suite 3500
Minneapolis, MN 55402
Attention: John M. Stern
If to Escrow Agent:
FIRST AMERICAN TITLE INSURANCE COMPANY
First American Title Insurance Company
121 South Eighth Street, Suite 1250
Minneapolis, Minnesota 55402
Attn: Construction Disbursing Dept.
Email: disbursing.mn@firstam.com
d. This agreement may be executed in any number of counterparts, each of
which is an original but all of which will constitute one instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGES FOLLOW]
24216078v5
15056.22
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first above written.
ESCROW AGENT:
FIRST AMERICAN TITLE
INSURANCE COMPANY
By:
Its:
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HOPKINS HRA:
HOUSING AND
REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF
HOPKINS
By: ________________________
Name: Patrick Hanlon
Its: Chair
By: ________________________
Name: Michael Mornson
Its: Executive Director
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AUTHORITY:
HENNEPIN COUNTY HOUSING AND
REDEVELOPMENT AUTHORITY,
a public body corporate and politic of the
State of Minnesota
APPROVED AS TO FORM
_____________________________ By:_________________________________
Assistant County Attorney Vice Chair of its Board
Date: ________________________
Attest:______________________________
Deputy/Clerk of the County Board
By:
____________________________________
Executive Director
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LCDA PROVIDER:
CITY OF HOPKINS, MINNESOTA
By: ____________________________
Name: Patrick Hanlon
Its: Mayor
By: ____________________________
Name: Michael Mornson
Its: City Manager
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ALATUS MD:
ALATUS HOPKINS MD LLC,
a Minnesota limited liability company
By: ____________________________
Name: Christian B. Osmundson
Its: Vice President
15
BORROWER:
ALATUS HOPKINS LIHTC I LLC,
a Minnesota limited liability company
By: Alatus Hopkins LIHTC I MM LLC,
a Minnesota limited liability
company
Its: Managing Member
By: ____________________________
Name: Christian B. Osmundson
Its: Vice President
This document drafted by:
WINTHROP & WEINSTINE, P.A. (JMS)
225 South Sixth Street, Suite 3500
Minneapolis, MN 55402
(612) 604-6400
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EXHIBIT A
LEGAL DESCRIPTION
Real property in the City of Hopkins, County of Hennepin, State of Minnesota, described
as follows:
Lot 2, Block 2, Mile 14 On Minnehaha Creek, according to the recorded plat thereof,
Hennepin County, Minnesota.
Torrens Property.
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EXHIBIT B
SWORN CONSTRUCTION STATEMENT
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EXHIBIT C
ALTA 33 DISBURSEMENTS ENDORSEMENT