Loading...
2025-11-03 City Council Agenda PacketCity of Albertville Council Agenda Monday, November 3, 2025 City Council Chambers 7 pm 6:45 – Planning Commissioner Interview PUBLIC COMMENTS -The City of Albertville welcomes and encourages public input on issues listed on the agenda or of general community interest. Citizens wishing to address the Council regarding specific agenda items, other than public hearings, are invited to do so under Public Forum and are asked to fill out a “Request to Speak Card.” Presentations are limited to five (5) minutes. Pages 3 4-6 7 8-9 10-103 104-109 1.Call to Order 2.Pledge of Allegiance – Roll Call 3.Recognitions – Presentations - Introductions 4.Public Forum – (time reserved 5 minutes) 5.Amendments to the Agenda 6.Consent Agenda All items under the Consent Agenda are considered to be routine by the City staff and will be enacted by one motion. In the event an item is pulled, it will be discussed in the order it is listed on the Consent Agenda following the approval of the remaining Consent items. Items pulled will be approved by a separate motion. A.Approve the October 20, 2025, Special Workshop Meeting minutes as presented. B.Approve the October 20, 2025, Regular City Council Meeting minutes as presented. C.Authorize the Monday, November 3, 2025, payment of claims as presented, except bills specifically pulled which are passed by separate motion. The claims listing has been provided to City Council as a separate document and is available for public view at City Hall upon request. D.Authorize the promotion of the following individual to the position of Probationary Paid- On-Call Firefighter with the Albertville Fire Department: Jaxon Cagle. E.Adopt Resolution No. 2025-46 Approving and Authorizing the Execution of Subordination Agreements. 7.Public Hearing A.Public Hearing – Financing a Senior Multifamily Housing Developments Mayor to open the public hearing Motion to close the public hearing (Motion to adopt Resolution No. 2025-43 giving approval to a proposed Housing Program and the issuance by the City of Becker, Minnesota of its Senior Living Revenue Notes (Engel Haus Expansion Project), Series 2025.) 8.Wright County Sheriff’s Office – Updates, reports, etc. 9.Department Business A.City Council 1.Committee Updates (STMA Arena, Planning, JPWB, Parks, Fire Board, FYCC) City of Albertville City Council Agenda Monday, November 3, 2025 Page 2 of 2 B. Building – None C. City Clerk – None D. Finance – None E. Fire – None F. Planning and Zoning 1. Approve BNSF Minor Subdivision 110-122 (Motion to adopt Resolution No. 2025-45 approving the Minor Subdivision of PID 101-999-444100 with conditions.) G. Public Works/Engineering – None H. Legal – None I. Administration 1. City Administrator’s Update 123-124 10. Announcements and/or Upcoming Meetings November 10 STMA Arena Board, 6 pm November 11 City Offices closed in observance of Veterans Day November 12 Planning Commission, 7 pm (Wednesday) November 17 City Council, 7 pm November 24 Joint Powers Water Board, 6 pm November 24 Park Committee, 7 pm November 27 City Offices closed in observance of Thanksgiving December 1 Truth-in-Taxation Hearing, 6:15 pm December 1 City Council, 7 pm 11. Adjournment • ALBERTVILLE CITY COUNCIL SPECIAL WORKSHOP DRAFT MINUTES October 20, 2025 – 6:45 pm Council Chambers Albertville City Hall 1. Call to Order Mayor Hendrickson called the workshop to order at 6:45 pm. Present: Mayor Hendrickson, Councilmembers Hayden, Olson and Zagorski. Absent: Councilmember Cocking Staff Present: City Administrator Nafstad, Fire Chief Bullen and City Clerk Luedke. 2. Interview of persons interested in serving on the City’s Planning Commission The City Council conducted an interview with one of the two applicants who had submitted applications for appointment to the City’s Planning Commission. The applicant shared his interest in serving on the Planning Commission and responded to questions from the City Council. Mayor Hendrickson informed the candidate that one additional interview would be conducted prior to the next meeting, after which a decision regarding the appointment would be made. Mayor Hendrickson thanked the applicant for attending. 3. Adjournment Mayor Hendrickson adjourned the workshop at 6:58 pm. Respectfully submitted, _____________________________ Kristine A. Luedke, City Clerk Agenda Page 3 ALBERTVILLE CITY COUNCIL DRAFT REGULAR MEETING MINUTES October 20, 2025 – 7 pm Council Chambers Albertville City Hall 1. Call to Order Mayor Hendrickson called the meeting to order at 7 pm. 2. Pledge of Allegiance – Roll Call Present: Mayor Hendrickson, Councilmembers Hayden, Olson and Zagorski. Absent: Councilmember Cocking. Staff Present: City Administrator Nafstad, Fire Chief Bullen, City Attorney Couri, Finance Director Lannes and City Clerk Luedke. 3. Recognitions – Presentations – Introductions A. Employee Service Awards 25 Years – Grant Fitch 20 Years – Tracey Nubbe 10 Years – Maeghan Becker, Eric Bullen and Matthew Minette Mayor Hendrickson recognized STMA Arena Manager Fitch, Administrative Assistant/Utility Billing Clerk II Nubbe, Administrative Assistant/Building Permit Tech Becker, Fire Chief Bullen and Public Works Minette for their years of service and along with the other Councilmembers thanked them for their years of service with the City of Albertville. 4. Public Forum – None 5. Amendments to the Agenda There were no amendments to the agenda. MOTION made by Councilmember Olson, seconded by Councilmember Zagorski to approve the October 20, 2025, agenda as submitted. Ayes: Hayden, Hendrickson, Olson and Zagorski. Nays: None. Absent: Cocking. The motion carried. 6. Consent Agenda All items under the Consent Agenda are considered to be routine by the City staff and will be enacted by one motion. In the event an item is pulled, it will be discussed in the order it is listed on the Consent Agenda following the approval of the remaining Consent items. Items pulled will be approved by a separate motion. A. Approve the October 6, 2025, regular City Council Meeting minutes as presented. B. Approve the October 20, 2025, Joint Governance Meeting Minutes as presented. C. Approve Payment Estimate No. 2 to Omann Contracting in the amount of $397,273 for the Main Avenue Improvements. Agenda Page 4 City Council Meeting Draft Minutes Page 2 Regular Meeting of October 20, 2025 MOTION made by Councilmember Olson, seconded by Councilmember Zagorski to approve October 6, 2025, consent agenda as submitted. Ayes: Hayden, Hendrickson, Olson and Zagorski. Nays: None. Absent: Cocking, The motion carried. 7. Public Hearing – None 8. Wright County Sheriff’s Office – Updates, reports, etc. There were no updates from Wright County Sheriff’s Office. 9. Department Business A. City Council 1. Committee Updates (STMA Ice Arena, Planning, JPWB, Parks, Fire Board, FYCC, etc.) Councilmember Zagorski provided an update from the Planning Commission meeting, noting there was a request for a minor subdivision for BNSF Railway Company and a presentation on the future vision plan for the downtown area. He provided details from the presentation and answered questions from the other Councilmembers. City Administrator Nafstad stated that, since Albertville was not part of the Metropolitan Council, a formal Comprehensive Plan was not required. Instead, he explained the City conducts a vision study, including the downtown area, to support the City’s zoning and land use plannig. Administrator Nafstad explained the study would be presented to the Parks Committee before going to Council. He noted the vision document was first prepared in 2012 and has been updated over time. Nafstad also responded to questions from Council. B. Building – None C. City Clerk – None D. Finance – None E. Fire 1. Professional Services Agreement for a Fire Station Needs Study and Schematic Design Fire Chief Bullen presented the staff report, noting that the Albertville Fire Hall was 25 years old. He explained that the study would evaluate potential updates, such as accommodating future housing needs or expanding the dayroom. He said the City staff requested quotes from two architecture firms and after review, recommended CNH Architects who are currently working with other local cities who are pleased with their services. Chief Bullen stated the scope of the work would include construction documents, preliminary pricing and other related items. He responded to questions from Council. City Administrator Nafstad provided additional information and noted that the study was looking at the existing building and would take into consideration if in the future duty crew needed it and what it may take to accommodate sleeping quarters and updating the area of the lockers were and what it would take to add a locker room. Agenda Page 5 City Council Meeting Draft Minutes Page 3 Regular Meeting of October 20, 2025 MOTION made by Councilmember Hayden, seconded by Councilmember Olson to authorize a Professional Services Agreement with CNH Architects for a Fire Station Needs Study and Schematic Design project. Ayes: Hayden, Hendrickson, Olson and Zagorski. Nays: None. Absent: Cocking. The motion carried. F. Planning and Zoning – None G. Public Works/Engineering – None H. Legal – None I. Administration 1. City Administrator Update City Administrator Nafstad presented the City Administrator’s Update which included information regarding the City’s compost site, specifically the new hours, the attendant position, and potential future options for the site. He responded questions from Council. Announcements and/or Upcoming Meetings October 27 Joint Power Water Board, 6 pm Parks Committee, 7 pm November 3 City Council, 7 pm November 10 STMA Arena Board, 6 pm November 11 City Offices closed in observance of Veterans Day November 12 Planning Commission, 7 pm (Wednesday) November 17 City Council, 7 pm 10. Adjournment MOTION made by Councilmember Olson, second by Councilmember Hayden to adjourn the meeting at 7:47 pm. Ayes: Hayden, Hendrickson, Olson and Zagorski. Nays: None. Absent: Cocking. The motion carried. Respectfully submitted, _____________________________ Kristine A. Luedke, City Clerk Agenda Page 6 Mayor and Council Request for Action November 3, 2025 SUBJECT: CONSENT – FINANCE – PAYMENT OF BILLS RECOMMENDATION: It is respectfully requested that the Mayor and Council consider the following: MOTION TO: Authorize the Monday, November 3, 2025, payment of the claims as presented except the bills specifically pulled, which are passed by separate motion. The claims listing has been provided to Council as a separate document. The claims listing is available for public viewing at City Hall upon request. BACKGROUND: The City processes claims on a semi-monthly basis. The bills are approved through their respective departments and administration and passed onto the City Council for approval. KEY ISSUES: • Account codes starting with 810 are STMA Arena Expenses/Vendors (bolded) and key issues will be presented in the claims listing document. POLICY/PRACTICES CONSIDERATIONS: It is the City’s policy to review and approve payables on a semi-monthly basis. FINANCIAL CONSIDERATIONS: City staff have reviewed and recommend approval of payments presented. LEGAL CONSIDERATIONS: The Mayor and Council have the authority to approve all bills pursuant to Minnesota State Law, which requires all bills to be paid in a timely manner, generally within 30 days unless one party determines to dispute the billing. Responsible Person: Tina Lannes, Finance Director Submitted through: Adam Nafstad, City Administrator-PWD Attachment: • List of Claims (under separate cover) Agenda Page 7 Mayor and Council Request for Action November 3, 2025 SUBJECT: CONSENT – FIRE – AUTHORIZE THE PROMOTION OF A PROBATIONARY PAID-ON-CALL FIREFIGHTER RECOMMENDATION: It is respectfully requested that the Mayor and City Council authorize the following: MOTION TO: Authorize the promotion of the following individual to the position of Probationary Paid-On-Call Firefighter with the Albertville Fire Department: • Jaxon Cagle BACKGROUND: The Albertville Fire Department (AFD) currently has openings in the Paid- On-Call membership and is requesting the approval to promote the above-named individual from the position of Reserve Firefighter to Probationary Paid-On-Call Firefighter. The Reserve Firefighter has met the requirements for promotion to Probationary Paid-On-Call Firefighter as outlined in Section 5.4.1 (Reserve Firefighter) of the AFD Standard Operating Policies and Procedures. These requirements include, but are not limited to: a. Completing Firefighter I/II, HazMat Operations b. Completing CPR/Emergency Medical Responder (EMR) c. Completing FEMA ICS / NIMS 100 / 200 / 700 d. Obtain an MBFTE Firefighter License e. Obtain an EMSRB EMR Certification f. Responding to at least 20% of the total calls per quarter g. Attendance at regularly scheduled meetings and/or training drills and official events The AFD Board of Officers voted unanimously for the promotion of the above-named individual. The AFD is asking for Council authorization for the promotion to Probationary Paid-On-Call Firefighter. If approved by the Council, the new Probationary Paid-On-Call Firefighter will be promoted on Thursday, November 6th, 2025, at the Albertville Fire Department. The new Probationary Paid-On-Call Firefighter will serve a probationary period for a minimum of 12-consecutive months or as deemed necessary by the Fire Chief and/or Board of Officers. KEY ISSUES: • The AFD has an opening in the Paid-On-Call membership. • One member has successfully completed the minimum requirements for promotion from Reserve Firefighter to Probationary Paid-On-Call Firefighter. Agenda Page 8 Mayor and Council Request for Action – November 3, 2025 Fire – Promotion of Probationary Paid-On-Call Firefighter Page 2 of 2 • The AFD Board of Officers voted unanimously for the promotion. • If approved by the Council, the member will be promoted on Thursday, November 6th, 2025, at the Albertville Fire Department. FINANCIAL CONSIDERATIONS: The costs associated with the promotion are part of the 2025 Fire Department Operating budget. LEGAL ISSUES: The City Council has the authority to establish new positions and hire personnel. Responsible Person: Eric Bullen, Fire Chief Submitted Through: Adam Nafstad, City Administrator-PWD Agenda Page 9 EXTRACT OF MINUTES OF MEETING OF THE CITY COUNCIL OF THE CITY OF ALBERTVILLE, MINNESOTA HELD: November 3, 2025 Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Albertville, Wright County, Minnesota, was duly called and held at the City Hall in said City on November 3, 2025 at 7:00 P.M. The following members were present: and the following were absent: Member ________________ introduced the following resolution and moved its adoption: CITY OF ALBERTVILLE COUNTY OF WRIGHT STATE OF MINNESOTA RESOLUTION NO. 2025-46 RESOLUTION APPROVING AND AUTHORIZING THE EXECUTION OF SUBORDINATION AGREEMENTS A. WHEREAS, in 2010 the City issued, sold and delivered its (i) $4,750,000 Multifamily Housing Revenue Bonds (Albertville Meadows Apartments Project), Series 2010 (the “Bonds”) pursuant to an Indenture of Trust dated as of December 1, 2010, by and between the City and U.S. Bank Trust Company, National Association (the “Trustee”) and (ii) $3,300,000 Subordination Multifamily Housing Revenue Note (Albertville Meadows Apartments Project), Series 2010 (the “Note”) for the purpose of making funds available to make a loan to Albertville Leased Housing Associates III, LP, a Minnesota limited partnership (the “Borrower”) for the purpose of acquiring and rehabilitating a multifamily rental housing development located in the City (the “Project”). B. WHEREAS, at the time of the issuance of the Bonds, the City, the Borrower, and the Trustee entered into that certain Regulatory Agreement dated as of December 1, 2010 filed December 22, 2010, as Document No. A1165109 in the Office of the County Recorder, Wright County, Minnesota (the “Bonds Regulatory Agreement”) to restrict the use of the proceeds of the Bonds and the use of the Project. C. WHEREAS, at the time of the issuance of the Note, the City, and the Trustee entered into that certain Regulatory Agreement (Subordinate Note) dated as of December 21, 2010 filed December 22, 2010, as Document No. A1165114 in the Office of the County Recorder, Wright County, Minnesota (the “Note Regulatory Agreement” and together with the Bonds Regulatory Agreement, the “Regulatory Agreements”) to restrict the use of the proceeds of the Note and the use of the Project. Agenda Page 10 City of Albertville Resolution No. 2025-46 Meeting of November 3, 2025 Page 2 D. WHEREAS, the Borrower is receiving new financing for the Project from Colliers Mortgage LLC, a Delaware limited liability company (the “Lender”) and as a condition for the provision of such financing, the Lender has required that the City subordinate its interest in the Regulatory Agreements to the Lender pursuant to two Subordination Agreements (the “Subordination Agreements”). E. WHEREAS, drafts of the Subordination Agreements have been submitted to the City Council of the City for approval. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Albertville, Minnesota, as follows: 1. The City Council hereby approves the Subordination Agreements in substantially the forms submitted, and the Mayor and City Administrator are hereby authorized and directed to execute the Subordination Agreements on behalf of the City. 2. The approval hereby given to the Subordination Agreements includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the City officials authorized by this resolution to execute the Subordination Agreements. The execution of the Subordination Agreements by the appropriate officer or officers of the City shall be conclusive evidence of the approval of the Subordination Agreements in accordance with the terms hereof. The motion for adoption of the foregoing resolution was duly seconded by member _________________ and, after full discussion thereof, and upon a vote being taken thereof, the following voted in favor thereof: and the following voted against same: Adopted by the City Council of the City of Albertville this 3rd day of November 2025. _________________________ Jillian Hendrickson, Mayor ATTEST: ___________________________ Adam Nafstad, City Administrator Agenda Page 11 City of Albertville Resolution No. 2025-46 Meeting of November 3, 2025 Page 3 STATE OF MINNESOTA COUNTY OF WRIGHT CITY OF ALBERTVILLE I, the undersigned, being the duly qualified and acting City Administrator of the City of Albertville, Minnesota, DO HEREBY CERTIFY that I have carefully compared the attached and foregoing extract of minutes with the original minutes of a meeting of the City Council held on the date therein indicated, which are on file and of record in my office, and the same is a full, true and complete transcript therefrom insofar as the same relates to a Resolution Authorizing the Execution of Subordination Agreements. WITNESS my hand as such City Administrator of the City of Albertville, Minnesota this 3rd day of November, 2025. _____________________________ Adam Nafstad, City Administrator Agenda Page 12 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-1 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year above written. GOVERNMENTAL ENTITY The City of Albertville, a municipal corporation and a political subdivision of the State of Minnesota By: Name: Title: Agenda Page 13 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-1 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year above written. GOVERNMENTAL ENTITY The City of Albertville, a municipal corporation and a political subdivision of the State of Minnesota By: Name: Title: Agenda Page 14 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-2 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of _____________ County of ___________ On _________________________________, before me, ______________________________________, notary public, personally appeared ______________________________________who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of _____________ that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature ___________________________ Agenda Page 15 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-2 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of _____________ County of ___________ On _________________________________, before me, ______________________________________, notary public, personally appeared ______________________________________who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of _____________ that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature ___________________________ Agenda Page 16 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-1 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year above written. GOVERNMENTAL ENTITY The City of Albertville, a municipal corporation and a political subdivision of the State of Minnesota By: Name: Title: Agenda Page 17 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-1 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year above written. GOVERNMENTAL ENTITY The City of Albertville, a municipal corporation and a political subdivision of the State of Minnesota By: Name: Title: Agenda Page 18 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-2 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of _____________ County of ___________ On _________________________________, before me, ______________________________________, notary public, personally appeared ______________________________________who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of _____________ that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature ___________________________ Agenda Page 19 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-2 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of _____________ County of ___________ On _________________________________, before me, ______________________________________, notary public, personally appeared ______________________________________who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of _____________ that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature ___________________________ Agenda Page 20 Subordination Agreement (Governmental Entity) The Bedford Apartments Prepared by, and after recording return to: SUBORDINATION AGREEMENT GOVERNMENTAL ENTITY Agenda Page 21 Subordination Agreement (Governmental Entity) The Bedford Apartments Page 1 SUBORDINATION AGREEMENT GOVERNMENTAL ENTITY FOR REGULATORY AGREEMENT REGULATORY AGREEMENT ONLY/NO SUBORDINATE DEBT THIS SUBORDINATION AGREEMENT FOR REGULATORY AGREEMENT (this “Agreement”) is effective as of the ___ day of _____, 202_, by the City of Albertville, a municipal corporation and a political subdivision of the State of Minnesota (“Governmental Entity”), and BPG Albertville Meadows MN LLC, a Delaware limited liability company (“Borrower”), for the benefit of Colliers Mortgage LLC, a Delaware limited liability company, its successors and assigns (“Lender”). RECITALS: A.Simultaneously herewith Lender is making a loan to Borrower in the original principal amount of $__________ (“Loan”) pursuant to a Multifamily Loan and Security Agreement between Lender and Borrower (as supplemented or amended from time to time, the “Loan Agreement”) and evidenced by a Multifamily Note by Borrower to Lender (as supplemented or amended from time to time, the “Note”). The Loan is to be secured by a Multifamily Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing that will be recorded among the records of Wright County, Minnesota (“Official Records”) (as supplemented or amended from time to time, the “Mortgage”) of certain improved real property located at 10740 County Rd 37 NE,City of Albertville,Wright County, Minnesota, as more particularly described on Exhibit A attached hereto (“Property”). The Loan Agreement, the Note and the Mortgage, together with all other documents executed with respect to the Loan, are hereinafter collectively referred to as the “Loan Documents”. B.In connection with the construction and development of the Property, Borrower entered into a certain REGULATORY AGREEMENT dated as of December 1, 2010 (“Regulatory Agreement”) in favor of the Governmental Entity, which was recorded as Document No. A 1165109 of the Official Records, pursuant to which the Property was subjected to certain restrictions by Governmental Entity. C. As a condition to making the Loan, Lender requires that the lien of the Mortgage be superior to the lien of the Regulatory Agreement. Lender will not make the Loan unless Governmental Entity and Borrower agree to subordinate their rights and obligations under the Regulatory Agreement. D.Borrower and Governmental Entity hereby agree to subordinate the Regulatory Agreement on and subject to the terms, conditions and requirements set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual benefits accruing to the parties hereto and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: Agenda Page 22 Subordination Agreement (Governmental Entity) The Bedford Apartments Page 2 1.Recitals. The foregoing Recitals are hereby incorporated into this Agreement as agreements among the parties. 2.Subordination. The Governmental Entity hereby agrees that the Regulatory Agreement is and shall at all times continue to be, subordinate, subject and inferior to the rights of Lender under the Loan Documents and that the liens, rights (including approval and consent rights), remedies, payment interests, priority interests, and security interests granted to Governmental Entity pursuant to or in connection with the Regulatory Agreement are hereby expressly acknowledged to be in all respects and at all times, subject, subordinate and inferior in all respects to the liens, rights (including approval and consent rights), remedies, payment, priority and security interests granted to Lender pursuant to the Loan Documents and the terms, covenants, conditions, operations and effects thereof. Notwithstanding the above, Governmental Entity may exercise the remedies of specific performance or injunctive relief at any time in the event of a default under or breach of the terms of the Regulatory Agreement. 3.Financing, Encumbrance and Transfer Approval. Governmental Entity hereby approves and acknowledges the transfer of the Property to Borrower and the financing evidenced by the Mortgage. Governmental Entity further agrees that any transfer of the Property in connection with foreclosure of the Mortgage or a deed in lieu thereof shall not require Governmental Entity’s consent but shall require notice to Governmental Entity. 4.Satisfaction of Prior Indebtedness. Governmental Entity acknowledges and agrees that the “Loan” associated with and defined in the Regulatory Agreement, owed by Borrower’s predecessor in interest to Governmental Entity has been forgiven by the Governmental Entity, in all respects. Borrower’s acquisition of the Property subject to the Regulatory Agreement does not in any way constitute an assumption of the “Loan”. 5.Lender Notice of Default. In consideration of Governmental Entity’s agreements contained in this Agreement, Lender agrees that in the event of any default by Borrower under the Loan Documents, Governmental Entity shall be entitled to receive a copy of any notice of default given by Lender to Borrower under the Loan Documents. Neither the giving nor the failure to give a notice to Governmental Entity pursuant to this Section 5 will affect the validity of any notice given by Lender to the Borrower. 6.Governmental Entity Notice of Default. Governmental Entity shall give Lender a concurrent copy of each material notice (including without limitation each notice of default) given by Governmental Entity under or with respect to the Regulatory Agreement, and agrees that Lender, at Lender’s sole election, shall have the right (but not the obligation) to cure any default by Borrower under the Regulatory Agreement on its and/or Borrower’s behalf. Governmental Entity hereby represents that, to the best of its knowledge, there is no current default under the Regulatory Agreement. 7.Governmental Entity's Rights. Except as set forth in Sections 2 and 8 of this Agreement, nothing in this Agreement is intended to abridge or adversely affect any right or obligation of Borrower and/or Governmental Entity, respectively, under the Regulatory Agreement; provided that, (A) the Regulatory Agreement may be released but it may not be Agenda Page 23 Subordination Agreement (Governmental Entity) The Bedford Apartments Page 3 modified, amended, changed or otherwise altered without the prior written consent of Lender so long as the Loan is secured by the Property and (B) for so long as the Loan is secured by the Property, notwithstanding the terms of the Regulatory Agreement to the contrary, neither Borrower nor Governmental Entity will, without Lender’s prior written consent, exercise or seek any right or remedy under the Regulatory Agreement or available at law or in equity which will or could result in (i) a transfer of possession of the Property or the control, operations or management thereof, (ii) the collection or possession of rents or revenues from or with respect to the Property by any party other than Borrower or Lender; (iii) appointment of a receiver for the Property;(iv) the application of insurance or condemnation proceeds other than as approved by Lender pursuant to the Loan Documents; (v) the removal or replacement of the existing property manager of the Property; (vi) a material adverse effect on Lender’s security for the Loan; or (vii) monetary penalties and money damages as a penalty for non-compliance. 8.Foreclosure by Lender. In the event of foreclosure, deed in lieu of foreclosure, or similar disposition of the Property by Lender, no consent shall be required from Governmental Entity. 9.Entire Agreement. This Agreement represents the entire understanding and agreement between the parties hereto with regard to the subordination of the Regulatory Agreement to the lien or charge of the Loan Documents, and shall supersede and cancel any prior agreements with regard to this subject matter. 10.Binding Provisions. The covenants and agreements contained in this Agreement shall be binding upon the heirs, personal representatives, successors and assigns of the respective parties to this Agreement. 11.Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of State Minnesota. 12.Modifications. This Agreement may not be modified orally or in any manner other than by an agreement in writing signed by the parties hereto or their respective successors in interest. 13.Notices. All notices required or permitted hereunder shall be deemed to have been received either (i) when delivered by hand and the party giving such notice has received a signed receipt thereof, or (ii) three (3) days following the date deposited in the United States mail, postage prepaid, by registered or certified mail, return receipt requested, addressed as follows (or addressed in such other manner as the party being notified shall have requested by written notice to the other party): If to Governmental Entity: _______________________ _______________________ _______________________ _______________________ Agenda Page 24 Subordination Agreement (Governmental Entity) The Bedford Apartments Page 4 If to Lender: ______________________ ______________________ ______________________ Attention: _____________ Deal ID No.:___________ Facsimile: _____________ If to Borrower: _______________________ _______________________ _______________________ _______________________ _______________________ 14.Further Instruments. Each of the parties hereto will, whenever and as often as they shall be requested to do so by the other, execute, acknowledge and deliver, or cause to be executed, acknowledged or delivered, any and all such further instruments and documents as may be reasonably necessary to carry out the intent and purpose of this Agreement, and to do any and all further acts reasonably necessary to carry out the intent and purpose of this Agreement. 15.Valid Authorization. Each person executing this Agreement on behalf of a party hereto represents and warrants that such person is duly and validly authorized to do so on behalf of such party with full right and authority to execute this Agreement and to bind such party with respect to all of its obligations hereunder. 16.Counterparts. T his Agreement may be executed in counterparts each of which shall be deemed an original and all of which when taken together constitute one and the same instrument, binding on all of the parties. The signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart. NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN T HE REGULATORY AGREEMENT BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF THE MORTGAGE. Agenda Page 25 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-1 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year above written. GOVERNMENTAL ENTITY The City of Albertville, a municipal corporation and a political subdivision of the State of Minnesota By: Name: Title: Agenda Page 26 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-2 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of _____________ County of ___________ On _________________________________, before me, ______________________________________, notary public, personally appeared ______________________________________who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of _____________ that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature ___________________________ Agenda Page 27 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-3 BORROWER: BPG ALBERTVILLE MEADOWS MN LLC, a Delaware limited liability company By:Bedford Property Group LLC, a Delaware limited liability company Manager By: ____________________________ Sean A. Swift Manager By: ____________________________ Joshua M. Galen Manager By: ____________________________ Bercut O. Smith Manager Agenda Page 28 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-4 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of _____________ County of ___________ On _________________________________, before me, ______________________________________, notary public, personally appeared ______________________________________who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of _____________ that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature ___________________________ Agenda Page 29 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-5 LENDER: Colliers Mortgage LLC, a Delaware limited liability company By: Name: Title: Agenda Page 30 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-6 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of _____________ County of ___________ On _________________________________, before me, ______________________________________, notary public, personally appeared ______________________________________who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of _____________ that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature ___________________________ Agenda Page 31 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-7 EXHIBIT A Legal Description Agenda Page 32 Subordination Agreement (Governmental Entity) The Bedford Apartments Prepared by, and after recording return to: SUBORDINATION AGREEMENT GOVERNMENTAL ENTITY Agenda Page 33 Subordination Agreement (Governmental Entity) The Bedford Apartments Page 1 SUBORDINATION AGREEMENT GOVERNMENTAL ENTITY FOR REGULATORY AGREEMENT REGULATORY AGREEMENT ONLY/NO SUBORDINATE DEBT THIS SUBORDINATION AGREEMENT FOR REGULATORY AGREEMENT (this “Agreement”) is effective as of the ___ day of _____, 202_, by the City of Albertville, a municipal corporation and a political subdivision of the State of Minnesota (“Governmental Entity”), and BPG Albertville Meadows MN LLC, a Delaware limited liability company (“Borrower”), for the benefit of Colliers Mortgage LLC, a Delaware limited liability company, its successors and assigns (“Lender”). RECITALS: A.Simultaneously herewith Lender is making a loan to Borrower in the original principal amount of $__________ (“Loan”) pursuant to a Multifamily Loan and Security Agreement between Lender and Borrower (as supplemented or amended from time to time, the “Loan Agreement”) and evidenced by a Multifamily Note by Borrower to Lender (as supplemented or amended from time to time, the “Note”). The Loan is to be secured by a Multifamily Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing that will be recorded among the records of Wright County, Minnesota (“Official Records”) (as supplemented or amended from time to time, the “Mortgage”) of certain improved real property located at 10740 County Rd 37 NE,City of Albertville,Wright County, Minnesota, as more particularly described on Exhibit A attached hereto (“Property”). The Loan Agreement, the Note and the Mortgage, together with all other documents executed with respect to the Loan, are hereinafter collectively referred to as the “Loan Documents”. B.In connection with the construction and development of the Property, Borrower entered into a certain REGULATORY AGREEMENT dated as of December 21, 2010 (“Regulatory Agreement”) in favor of the Governmental Entity, which was recorded as Document No. A 1165114 of the Official Records, pursuant to which the Property was subjected to certain restrictions by Governmental Entity. C. As a condition to making the Loan, Lender requires that the lien of the Mortgage be superior to the lien of the Regulatory Agreement. Lender will not make the Loan unless Governmental Entity and Borrower agree to subordinate their rights and obligations under the Regulatory Agreement. D.Borrower and Governmental Entity hereby agree to subordinate the Regulatory Agreement on and subject to the terms, conditions and requirements set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual benefits accruing to the parties hereto and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: Agenda Page 34 Subordination Agreement (Governmental Entity) The Bedford Apartments Page 2 1.Recitals. The foregoing Recitals are hereby incorporated into this Agreement as agreements among the parties. 2.Subordination. The Governmental Entity hereby agrees that the Regulatory Agreement is and shall at all times continue to be, subordinate, subject and inferior to the rights of Lender under the Loan Documents and that the liens, rights (including approval and consent rights),remedies, payment interests, priority interests, and security interests granted to Governmental Entity pursuant to or in connection with the Regulatory Agreement are hereby expressly acknowledged to be in all respects and at all times, subject, subordinate and inferior in all respects to the liens, rights (including approval and consent rights), remedies, payment, priority and security interests granted to Lender pursuant to the Loan Documents and the terms, covenants, conditions, operations and effects thereof. Notwithstanding the above, Governmental Entity may exercise the remedies of specific performance or injunctive relief at any time in the event of a default under or breach of the terms of the Regulatory Agreement. 3.Financing, Encumbrance and Transfer Approval. Governmental Entity hereby approves and acknowledges the transfer of the Property to Borrower and the financing evidenced by the Mortgage. Governmental Entity further agrees that any transfer of the Property in connection with foreclosure of the Mortgage or a deed in lieu thereof shall not require Governmental Entity’s consent but shall require notice to Governmental Entity. 4.Satisfaction of Prior Indebtedness. Governmental Entity acknowledges and agrees that the “Loan” associated with and defined in the Regulatory Agreement, owed by Borrower’s predecessor in interest to Governmental Entity has been forgiven by the Governmental Entity, in all respects. Borrower’s acquisition of the Property subject to the Regulatory Agreement does not in any way constitute an assumption of the “Loan”. 5.Lender Notice of Default. In consideration of Governmental Entity’s agreements contained in this Agreement, Lender agrees that in the event of any default by Borrower under the Loan Documents, Governmental Entity shall be entitled to receive a copy of any notice of default given by Lender to Borrower under the Loan Documents. Neither the giving nor the failure to give a notice to Governmental Entity pursuant to this Section 5 will affect the validity of any notice given by Lender to the Borrower. 6.Governmental Entity Notice of Default. Governmental Entity shall give Lender a concurrent copy of each material notice (including without limitation each notice of default) given by Governmental Entity under or with respect to the Regulatory Agreement, and agrees that Lender, at Lender’s sole election, shall have the right (but not the obligation) to cure any default by Borrower under the Regulatory Agreement on its and/or Borrower’s behalf. Governmental Entity hereby represents that, to the best of its knowledge, there is no current default under the Regulatory Agreement. 7.Governmental Entity's Rights. Except as set forth in Sections 2 and 8 of this Agreement, nothing in this Agreement is intended to abridge or adversely affect any right or obligation of Borrower and/or Governmental Entity, respectively, under the Regulatory Agreement; provided that, (A) the Regulatory Agreement may be released but it may not be Agenda Page 35 Subordination Agreement (Governmental Entity) The Bedford Apartments Page 3 modified, amended, changed or otherwise altered without the prior written consent of Lender so long as the Loan is secured by the Property and (B) for so long as the Loan is secured by the Property, notwithstanding the terms of the Regulatory Agreement to the contrary, neither Borrower nor Governmental Entity will, without Lender’s prior written consent, exercise or seek any right or remedy under the Regulatory Agreement or available at law or in equity which will or could result in (i) a transfer of possession of the Property or the control, operations or management thereof, (ii) the collection or possession of rents or revenues from or with respect to the Property by any party other than Borrower or Lender; (iii) appointment of a receiver for the Property;(iv) the application of insurance or condemnation proceeds other than as approved by Lender pursuant to the Loan Documents; (v) the removal or replacement of the existing property manager of the Property; (vi) a material adverse effect on Lender’s security for the Loan; or (vii) monetary penalties and money damages as a penalty for non-compliance. 8.Foreclosure by Lender. In the event of foreclosure, deed in lieu of foreclosure, or similar disposition of the Property by Lender, no consent shall be required from Governmental Entity. 9.Entire Agreement. This Agreement represents the entire understanding and agreement between the parties hereto with regard to the subordination of the Regulatory Agreement to the lien or charge of the Loan Documents, and shall supersede and cancel any prior agreements with regard to this subject matter. 10.Binding Provisions. The covenants and agreements contained in this Agreement shall be binding upon the heirs, personal representatives, successors and assigns of the respective parties to this Agreement. 11.Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of State Minnesota. 12.Modifications. This Agreement may not be modified orally or in any manner other than by an agreement in writing signed by the parties hereto or their respective successors in interest. 13.Notices. All notices required or permitted hereunder shall be deemed to have been received either (i) when delivered by hand and the party giving such notice has received a signed receipt thereof, or (ii) three (3) days following the date deposited in the United States mail, postage prepaid, by registered or certified mail, return receipt requested, addressed as follows (or addressed in such other manner as the party being notified shall have requested by written notice to the other party): If to Governmental Entity: _______________________ _______________________ _______________________ _______________________ Agenda Page 36 Subordination Agreement (Governmental Entity) The Bedford Apartments Page 4 If to Lender: ______________________ ______________________ ______________________ Attention: _____________ Deal ID No.:___________ Facsimile: _____________ If to Borrower: _______________________ _______________________ _______________________ _______________________ _______________________ 14.Further Instruments. Each of the parties hereto will, whenever and as often as they shall be requested to do so by the other, execute, acknowledge and deliver, or cause to be executed, acknowledged or delivered, any and all such further instruments and documents as may be reasonably necessary to carry out the intent and purpose of this Agreement, and to do any and all further acts reasonably necessary to carry out the intent and purpose of this Agreement. 15.Valid Authorization. Each person executing this Agreement on behalf of a party hereto represents and warrants that such person is duly and validly authorized to do so on behalf of such party with full right and authority to execute this Agreement and to bind such party with respect to all of its obligations hereunder. 16.Counterparts. T his Agreement may be executed in counterparts each of which shall be deemed an original and all of which when taken together constitute one and the same instrument, binding on all of the parties. The signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart. NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN T HE REGULATORY AGREEMENT BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF THE MORTGAGE. Agenda Page 37 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-1 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year above written. GOVERNMENTAL ENTITY The City of Albertville, a municipal corporation and a political subdivision of the State of Minnesota By: Name: Title: Agenda Page 38 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-2 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of _____________ County of ___________ On _________________________________, before me, ______________________________________, notary public, personally appeared ______________________________________who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of _____________ that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature ___________________________ Agenda Page 39 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-3 BORROWER: BPG ALBERTVILLE MEADOWS MN LLC, a Delaware limited liability company By:Bedford Property Group LLC, a Delaware limited liability company Manager By: ____________________________ Sean A. Swift Manager By: ____________________________ Joshua M. Galen Manager By: ____________________________ Bercut O. Smith Manager Agenda Page 40 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-4 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of _____________ County of ___________ On _________________________________, before me, ______________________________________, notary public, personally appeared ______________________________________who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of _____________ that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature ___________________________ Agenda Page 41 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-5 LENDER: Colliers Mortgage LLC, a Delaware limited liability company By: Name: Title: Agenda Page 42 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-6 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of _____________ County of ___________ On _________________________________, before me, ______________________________________, notary public, personally appeared ______________________________________who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of _____________ that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature ___________________________ Agenda Page 43 Subordination Agreement (Governmental Entity) The Bedford Apartments Page A-7 EXHIBIT A Legal Description Agenda Page 44 Execution Copy Doc. No. A 1165109 OFFICE OF THE COUNTY RECORDER WRIGHT COUNTY, MINNESOTA Certified Filed and/or Recorded on 12-22-2010 at 10:24 Check#: 20796 Fee: $ 46.00 Payment Code 02 Addi. Fee Barb Gabrelcik, County Recorder REGULATORY AGREEMENT BY AND BETWEEN THE CITY OF ALBERTVILLE, MINNESOTA, as Issuer ALBERTVILLE LEASED HOUSING ASSOCIATES III, LP, as Borrower and U.S. BANK NATIONAL ASSOCIATION, as Trustee Dated as of December 1, 2010 Relating to: $4,750,000 CITY OF ALBERTVILLE, MINNESOTA MULTIFAMILY HOUSING REVENUE BONDS {ALBERTVILLE MEADOWS APARTMENTS PROJECT) SERIES2010 This instrument drafted by: Kennedy & Graven, Chaitered (BWJ) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, Minnesota 55402 '1--<-~+o: Cornmercial Partners Title, LLC 200 South Sixth Street Suite 1300 Minneapolis, ~~N 5§.'l._02/\ _ ·~'2--'isl o 6\ 11 ® l.'.::,l- Agenda Page 45 Section 1. Section 2. Section 3. Section 4. Section 4A. Section 5. Section 6. Section 7. Section 8. Section 9. Section I 0. Section 11. Section 12. Section 13. Section 14. Section 15. Section 16. Section 17. Section 18. Section 19. Section 20. Section 21. Section 22. Section 23. Exhibit A ExhibitB Exhibit C Exhibit D TABLE OF CONTENTS (This Table of Contents is for convenience of reference only, and is not a part of the Regulat01y Agreement.) Page Definitions and Interpretation ............................................................................................. 2 Federal Requirements; Residential Rental Property ........................................................... .4 Lower-Income Tenants; Federal Income Tax Law ............................................................. 5 Multifamily Housing Development; Compliance With Certain State Statutory Requirements ....................................................................................................................... 7 State Law Covenants ........................................................................................................... 7 Location of Development. ................................................................................................... 8 Tax Exempt Status of Bonds; Low Income Housing Credit. .............................................. 8 Indemnification of City and Trustee .................................................................................... 9 Consideration ....................................................................................................................... 9 Reliance ............................................................................................................................... 9 Covenants Run With the Land; Tenn; Burden and Benefit. ............................................. 1 O Access to Development and to Books and Records .......................................................... IO Term .................................................................................................................................. 10 Events of Default; Enforcement; Limitation of Liability .................................................. 1 O Governing Law .................................................................................................................. 12 Amendment; Termination ................................................................................................. 12 Additional Covenants of the Company ............................................................................. 14 Notices ............................................................................................................................... 14 Severability ........................................................................................................................ 15 Multiple Counterparts ........................................................................................................ 15 Limitation of City Liability ............................................................................................... 15 Change in Use ................................................................................................................... 15 Recording .......................................................................................................................... 15 Actions by City .................................................................................................................. 16 Legal Description of Project Premises ........................................................................... A-I Ce,tification of Continuing Program Compliance .......................................................... B-1 Certification of Amendment or Termination or Deletion of Covenants .......................... C-1 Income Computation and Ce1tification .......................................................................... D-1 Agenda Page 46 REGULATORY AGREEMENT THIS REGULATORY AGREEMENT (this "Regulatory Agreement") is made and entered into as of December I, 2010, by and among the CITY OF ALBERTVILLE, MINNESOTA, a municipal corporation and a political subdivision of the State of Minnesota (the "City"), U.S. BANK NATIONAL ASSOCIATION, in St. Paul, Minnesota (the "Trustee"), and ALBERTVILLE LEASED HOUSING ASSOCIATES III, LP, a Minnesota limited partnership (the "Company"). Recitals WHEREAS, the City has heretofore determined to adopt and implement a rental housing development revenue bond program (the "Program") under which the City will make a loan to the Company to provide financing for a qualified multifamily residential rental project, to be occupied partially by persons of low income within the meaning of Section 142( d) of the Internal Revenue Code of 1986, as amended (the "Code") and Section 42(g) of the Code, and to be acquired and rehabilitated, and occupied in conformance with the requirements of the Housing Act, as hereafter defined, and in conformance with the provisions of Sections 42, 142(a)(7) and 142(d) of the Code, all for the public purpose of assisting persons of low and moderate income within the jurisdiction of the City to obtain decent, safe and sanitary housing at rentals they can afford; and WHEREAS, the City has issued its Multifamily Housing Revenue Bonds (Albertville Meadows Apartments Project), Series 2010 (the "Bonds"), in the original aggregate principal amount of$4,750,000, pursuant to an Indenture of Trust, dated as of December I, 2010 (the "Indenture"), between the City and the Trustee, to provide funds to the Company which will be used to, among other things, finance a Development (as hereinafter defined), all under and in accordance with the Constitution and laws of the State of Minnesota; and WHEREAS, in connection with the issuance of the Bonds, the Company and the City have entered into a Loan Agreement, dated as of December I, 20 IO (the "Loan Agreement"), pursuant to which the City has agreed to make, and the Company has agreed to accept a loan in the aggregate principal amount of $4,750,000 (the "Loan") to finance the acquisition and renovation of a 75-unit multifamily rental housing facility located at 10740 County Road 37 in the City (the "Development" as hereinafter more fully described) which Development is located on the Land described in Exhibit A attached hereto; and WHEREAS, the Indenture and Loan Agreement require the execution and delivery of this Regulatory Agreement in order for the City to issue the Bonds. NOW THEREFORE, in consideration of the mutual covenants and unde1takings set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the City, Trustee and Company do hereby contract and agree as follows: Agenda Page 47 AGREEMENT Section I. Definitions and Interpretation. Unless otherwise expressly provided herein or unless the context clearly requires otherwise, the following terms shall have the respective meanings set fotth below for all purposes of this Regulatory Agreement: "Act" shall mean Minnesota Statutes, Chapters 462C and 474A, as amended; "Adjusted Family Income" means the adjusted gross income of a person (together with the adjusted gross income of all persons who intend to reside with such person in a single residential rental unit), for the applicable Certification Year, as cettified by such person in conformance with the requirements of this Regulatory Agreement, subject to such adjustments as shall be consistent with determinations of lower-income families under Section 8 of the United States Housing Act of 1937 and the regulations promulgated thereunder; "Affiliated Patty" of a person shall mean a person whose relationship to such other person is such that (i) the relationship between such persons would result in a disallowance of losses under Section 267 or 707(b) of the Code, or (ii) such persons are members of the same controlled group of corporations (as defined in Section 1563(a) of the Code, except that "more than 50 percent" shall be substituted for "at least 80 percent" each place it appears therein); "Bond Counsel" shall mean the same as defined in the Indenture; "Bonds" shall mean the City's Multifamily Housing Revenue Bonds (Albe1tville Meadows Apmtments Project), Series 2010, in the original aggregate principal amount of$4,750,000; "Ce1tification Year" means, with respect to any Lower-Income Tenant, the twelve-month period which begins on the earlier of (i} the first date on which such Tenant first occupies a residential unit in the Development on a rental basis subsequent to the first date upon which such residential unit shall be available for rental subsequent to any acquisition, construction or rehabilitation financed in whole or in patt from proceeds of the Loan; or (ii) the date on which such Tenant signs a lease with respect to a residential unit in the Development; "City" shall mean the City of Albe,tville, Minnesota, a municipal corporation and political subdivision under the laws of the State of Minnesota, and any successor to its functions; "Code" shall mean the Internal Revenue Code of 1986, as amended, and any final, temporary or proposed regulations applicable thereto or promulgated thereunder; "Company" shall mean Albe1tville Leased Housing Associates III, LP, a Minnesota limited partnership, and its successors and assigns; -----~--"~C~o~st=s~o°"f~J~s""s1=1a11_ce'' __ sha!Lmea11 _a11)'.lllllLaJL:_o_sts.and.expenses.1·elating-.to.the.issuanGe,-sale-and -----~ delivery of the Bonds, including, but not limited to, the underwriter's discount, all fees and expenses of legal counsel, financial consultants, feasibility consultants, the underwriter and accountants, any fee to be paid to the City, the preparation and printing of the Loan Agreement, the Indenture, the Regulatory Agreement, any offering memorandum, the Bonds, and all other related documents, the costs, if any, of rating the Bonds, and all other expenses relating to the issuance, sale and delive1y of the Bonds and any other costs which are treated as "issuance costs" within the meaning of Section 147(g) of the Code; 2 Agenda Page 48 "Delivery Date" shall mean the date of delivery of the Bonds to the Original Purchaser thereof; "Development" or "Project" shall mean the qualified residential rental project to be located on the real property described in Exhibit A hereto to be acquired and rehabilitated by the Company and which shall be owned and operated as a multifamily rental housing development under the Housing Act and as a qualified residential rental project within the meaning of Treasury Regulation, Section 1.103-8(b )( 4), and Sections 142(a)(7) and 142(d) of the Code; "Development Costs" shall have the same meaning as "Cost of the Project" or "Project Costs" as defined in the Indenture; "Housing Act" shall mean Minnesota Statutes, Chapter 462C, as from time to time amended; "Indenture" shall mean that ce,tain Indenture of Trust, dated as of December I, 2010, by and between the City and Trustee, pursuant to which the Bonds are issued and secured; "Loan" shall mean the loan of the proceeds of the Bonds to be made by the City to the Company pursuant to the Loan Agreement to provide financing for the Development; "Loan Agreement" shall mean the Loan Agreement, dated as of December I, 2010, by and between the City and Company providing, among other things, for the Loan; "Loan Documents" shall mean this Regulat01y Agreement, the Loan Agreement and the Mo1tgage (as defined in the Indenture); "Lower-Income Tenants" shall mean and include individuals or families with Adjusted Family Income which docs not exceed sixty percent (60%) of Median Income, adjusted for family size; provided that Adjusted Family Income shall be determined in a manner consistent with determinations of median income made under the leased housing program established under Section 8 of the United States Housing Act of 1937, as amended and the regulations promulgated thereunder and in the manner prescribed in Treasury Regulations, Section l.l 67(k)-3(b )(3), as said Section 8 and Treasury Regulations shall be in effect on the Delive,y Date. In no event, however, will the occupants ofa unit be considered to be of low or moderate income if all the occupants are full-time students (as defined in Section 15l(e)(4) of the Code), no one of which is entitled to file a joint federal income tax return; "Median Income" shall mean the median gross income for the area in which the Development is located as determined from time to time by the United States Depa1tment of Housing and Urban Development. For purposes of determining whether Adjusted Family Income qualifies a tenant for treatment as a Lower-Income Tenant, the Median Income shall be adjusted for family size; "Net Bond Proceeds" shall have the meanings assigned those terms in the Loan Agreement; "Program" shall mean the City's program for financing the Development as set fmth in the Indenture,the Loan Agreement,. and this.Regulatory.Agreement.~·-·· ---------~------~~-7 "Qualified Development Costs" shall mean the Development Costs, but only to the extent that such costs were paid or incurred by the Company, or any person "related" to the Company within the meaning of Section 144{a)(3) of the Code to the extent that (i) such costs are chargeable to the capital account of the Development or would be so chargeable either with a proper election by the Company or but for a proper election by the Company to deduct such costs, within the meaning of Treasury Regulation, Section l.103-8(a)(l), as the same may be amended or supplemented from time to time, and 3 Agenda Page 49 if charged to the Developlllent's capital account are deducted only through an allowance for depreciation, (ii) if such costs are for the Developlllent, such costs are made exclusively with respect to a residential rental project and any functionally related and subordinate facilities thereto within the meaning of Treasury Regulation, Section 1.103-8, and (iii) such Costs are not Costs oflssuance; "Qualified Project Period" shall lllean a period beginning on December 21, 20 I 0, and ending on the later of the date (i) December 20, 2025; (ii) the first day on which no tax-exelllpt private activity bonds issued with respect to the Developlllent are outstanding; or (iii) on which any assistance provided with respect to the Developlllent under Section 8 of the United States Housing Act of 1937 terminates (there currently is no such assistance); "Targeted Area" shall mean a "targeted area" as defined in Minnesota Statutes, Section 462C.02, subdivision 9, as amended; "Trustee" shall mean U.S. Bank National Association, and its successors in trust under the Indenture. Unless the context clearly requires otherwise, words of the masculine gender shall be construed to include correlative words of the feminine and neuter genders and vice versa, and words of the singular number shall be construed to include correlative words of the plural number and vice versa. This Regulatory Agreement and all the terms and provisions hereof shall be construed to effectuate the purposes set fo1ih herein and to sustain the validity hereof. The terms and phrases used in the recitals of this Regulato1y Agreement have been included for convenience of reference only and the llleaning, construction and interpretation of all such terms and phrases for purposes of this Regulatory Agreement shall be determined by references to this Section. The titles and headings of the sections of this Regulato,y Agreement have been inserted for convenience of reference only and are not to be considered a paii hereof and shall not in any way modify or restrict any of the terms or provisions hereof and shall never be considered or given any effect in construing this Regulatory Agreement or any provision hereof or in asce1iaining intent, if any question of intent shall arise. Terms and phrases used in this Regulatory Agreement and not defined herein shall have the llleanings assigned to those terms in the Indenture or in the Loan Agreement. For the purposes of this Regulatory Agreelllent, the Bonds shall be deellled "outstanding" until they have been fully paid and retired and no longer bear interest. Section 2. Federal Requirements; Residential Rental Property. For the purpose of colllpliance with Sections 42, l42(a)(7) and 142(d) of the Code, the Company represents, warrants and agrees that: (a) The Development will be acquired and rehabilitated for the purpose of providing -----nrnltifamil;1u:esidentiaLrentaLproperty __ and-the--Developmenkconstitutes-andAvill-constitute-lllultifamilyL-~~--- residential rental property as such phrase is used in Section l42(a)(7) of the Code. (b) At no time will either the Colllpany or any Affiliated Party occupy a unit in the Development other than units occupied or to be occupied by agents, employees or representatives of the Company and reasonably required for the proper maintenance or management of the Development; 4 Agenda Page 50 (c) The Development shall consist of a building or structure or proximate buildings or structures, (i) each containing one or more similarly constructed residential units which are to be used on other than a transient basis and any facilities which are functionally related and subordinate to such units within the meaning of Sections 142(a)(7) and 142(d) of the Code, (ii) each unit in the Development is to be rented or available for rental on a continuous basis to members of the general public in accordance with the requirements of Sections 142(a)(7) and 142(d) of the Code; and (iii) not less than 95% percent of the Development will consist of residential rental housing facilities and facilities functionally related and subordinate thereto; (d) The Development consists ofa single "project," and for this purpose, proximate buildings or structures arc part of the same project only if owned for federal income tax purposes by the same person and if the buildings are financed pursuant to a common plan; buildings or structures are proximate if they are all located on a single parcel of land or several parcels of land which are contiguous except for the interposition of a road, street, stream or similar property; (e) The Development shall not include any facility to be used as a hotel, motel, dormitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium, rest home, or trailer park or comt; (f) The Development does not include any building or structure which contains fewer than five (5) units, one of which is occupied by an owner of the units; (g) Each dwelling unit in the Development shall consist of separate and complete facilities for living, sleeping, eating, cooking and sanitation for a single person or family; and (h) The forty percent (40%) of the units in the Development required to be occupied by Lower-Income Tenants will be substantially similar to all other units in the Development, and such Lower-Income Tenants will c1~oy equal access to all common facilities included in the Project. Section 3. Lower-Income Tenants; Federal Income Tax Law. To the end of satisfying the requirements of Sections 42 and 142(d) of the Code relating to individuals of low income during the Qualified Project Period, the Company hereby represents, covenants and agrees as follows: (a) At all times during the Qualified Project Period, at least forty percent (40%) of the residential units in the Development shall be occupied by Lower-Income Tenants. The Company has elected under Sections 42(g)(l) and 142(d)(l) of the Code to meet the "40-60 Test" of Sections 42(d)( 1 )(B) and 142(d)( I )(B) of the Code. For purposes of satisfying the requirements of the preceding two sentences, the following rules apply: (i) the determination of whether an individual or family is a Lower-Income Tenant shall be made initially at the time the tenancy commences and at least annually thereafter on the basis of the then current income of the tenant (each a "Compliance Date"); -----------~---ii)------iLthe-tenant-was-a--Lower,,lncome-Tenant-upon-commencement--of:.the-tenant'-,.------ occupancy, or as of any prior determination under Section 3(a)(i) and if, as of the Compliance Date, the Adjusted Family Income of the tenant is not in excess of one hundred forty percent (140%) of the Median Income, the tenant shall be deemed to be a Lower-Income Tenant. If, as of such Compliance Date, the Adjusted Family Income of the individual or family is in excess of said 140% of the Median Income, the tenant shall no longer be deemed a Lower-Income Tenant if after such Compliance Date, but before the next Compliance Date, any unit of comparable or 5 Agenda Page 51 smaller size in the Development is rented to a new tenant whose Adjusted Family Income exceeds the Median Income; (iii) any completed unit vacated by a Lower-Income Tenant shall be treated as being occupied by such prior Lower-Income Tenant until reoccupied, other than for a temporary period not to exceed thiity-one (31) days, at which time the character of the unit shall be redetermined. If necessary in order to comply with the federal occupancy percentage, the next available unit or units in the Project shall be made available only to individuals or families qualifying as Lower- Income Tenants; for this purpose the "next available unit" shall be any dwelling unit of comparable or smaller size vacated by its previous tenant. (b) The Company shall, upon initial occupancy and annually thereafter, obtain and maintain on file a sworn, notarized income computation and certification in the form attached hereto as Exhibit D from each Lower-Income Tenant residing in the Development and each such Lower-Income Tenant's Adjusted Family Income shall be computed in the manner required by Treasury Regulation, Section l. l 67(k)-3(b ), as it shall be in effect on the Delivery Date, or in such other form and manner as may be required by applicable rules, rulings, procedures, official statements, regulations or policies now or hereafter promulgated or proposed by the Depm1ment of the Treasury or the Internal Revenue Service with respect to obligations issued under Section l42(d) of the Code. (c) The Company shall upon initial occupancy and annually thereafter, obtain and maintain on file from each Lower-Income Tenant evidence reasonably sufficient to verify the Lower-Income Tenant's income and assets, including as may be necessary (i) a copy of such Lower-Income Tenant's most recently filed federal income tax return, (ii) a verification from the Lower-Income Tenant's employer, if any, of the Lower-Income Tenant's wages and other compensation, and (iii) verification of other sources of income, if any. (d) Within ten (I 0) days after the initial occupancy of any unit in the Development by a Lower-Income Tenant, the Company will provide to the Trustee, and upon request, to the City, copies of such Lower-Income Tenant's income computation and certification in the form attached hereto as Exhibit D, together with the supporting documentation obtained pursuant to subsection (d); and the Company will permit any duly authorized representative of the City, the Trustee, the Department of the Treasmy or the Internal Revenue Service to inspect the books and records of the Company pe11aining to the income of Lower-Income Tenants residing in the Development. (e) The Company shall prepare and submit to the Trustee and on or before the first day of February of each year during the Qualified Project Period, a Certificate of Continuing Compliance as to compliance with this Section 3, executed by the Company in substantially the form attached hereto as Exhibit B. (f) The Company shall submit to the Secretary of the Treasury (at such time and such manner as the Secretary shall prescribe) an annual ce11ification as to whether the Development continues to meet the requirements of subparagraph (a) above, all as required by Section 42(1)(2) and Section 142(d) -----0Lthe-Code ... -The-Compan)u111del'Stands-that-failure-to-make--sueh--annual-eertifieatio1Hvill-result-in ~--~-~ penalty to the Company under §6652(i) of the Code. (g) The forty percent (40%) of the units in the Development required to be occupied by Lower-Income Tenants will be substantially similar to all other units in the Development, and such Lower-Income Tenants will enjoy equal access to all common facilities included in the Development. 6 Agenda Page 52 Section 4. Multifamily Housing Development; Compliance With Certain State Statutory Requirements. The City and Company hereby declare their understanding, intent and agreement that the Development is to be owned, managed and operated as a "multifamily housing development," as such term is defined in the Housing Act, and that the Development shall be operated in all respects in conformance with the requirements and provisions of the Housing Act, for so long as any of the Bonds remain outstanding and unpaid under the Indenture. Therefore, the Company represents, covenants and agrees as follows for so long as any of the Bonds remain outstanding and unpaid under the Indenture: (a) that the Development (upon completion) shall comply with all applicable building code requirements of the City; (b) to manage and operate the Development as a multifamily housing development within the meaning of the Housing Act; (c) that the Development is the rehabilitation of an existing multifamily building which meets the requirements for minimum rehabilitation expenditures in Sections 42(e)(2) and 42(e)(3)(A) of the Code; (d) that the Development includes participation by the MHFA or the City in financing the acquisition and rehabilitation of the Development; and ( c) that the Development will be occupied by tenants whose incomes at the time of their initial residency meet the requirements of Section 42(g) of the Code. Section 4A. State Law Covenants. As required by the Law, twenty percent (20%) of the units in the Project shall be occupied by tenants who are families or individuals with adjusted gross income not in excess of eighty percent (80%) of the median family income as estimated by the United States Department of Housing and Urban Development for the standard metropolitan area including the City. A tenant will continue to qualify as such as long as he or she continues to reside in such unit notwithstanding the fact that another occupant no longer resides in the unit because of death, divorce or disability. When a tenant leaves a unit, such unit will be considered occupied by a qualifying tenant for purposes of this section if it is held vacant and available for such occupancy until it is reoccupied by another tenant, other than for a temporary period which in no event shall exceed thitiy-one (31) days, at which time the status of the new tenant is to be determined. The Company recognizes that the City is authorized to issue the Bonds to finance the Project only if the Project complies with the restrictions set forth in Minnesota Statutes, Section 474A.047. The Company represents, warrants and covenants that the Project is a "project" as described in Subdivision l(a) of said Section 474A.047. The Company covenants, consistent with the requirements of Minnesota ·~---~Statutes,_Sectio1ulL4A.0A'Z,_Subdivision.2,_thaLfoLfifteeJL~l5.)~)(ears.the.maximum-rentaLrates_ofawency~ .. --~-~ percent (20%) of the units in the Project shall not exceed the area fair market rent or exception fair market rents for existing housing, if applicable, as established by the federal Department of Housing and Urban Development. The Company must annually ce1iify for said fifteen (15) years that the rental rates are within these limitations, and on request the City, Trustee or Company shall provide a copy of the annual ce1iification to the Minnesota Commissioner of finance. 7 Agenda Page 53 The Company acknowledges that Minnesota Statutes, Section 474A.047, Subdivision 3, requires that compliance with the rental rate and income requirements of this Section be monitored. The City, Trustee or one or more agents acting on its or their behalf (the "Monitor") may issue an order of noncompliance if the Project is found by the Monitor to be out of compliance with these requirements. The Company shall pay a penalty to the City equal to one-half of one percent (0.5%) of the total amount of bonds issued for the Project utilizing bonding authority under Minnesota Statutes, Chapter 474A, if the Monitor issues an order of noncompliance. For each additional year the Project is out of compliance, the annual penalty must be increased by one-half of one percent (0.5%) of the total amount of such bonds. Insubstantial violations may be waived. No order of non-compliance shall become final and effective until thirty (30) days after its dated date, and such effective date shall be further delayed if the Company in good faith contests the validity or accuracy of the order. This Section 4A is limited in its entirety to applicable provisions of Minnesota Statutes, Chapters 462C and 474A, but shall not limit any other obligations of the Company under this Regulatory Agreement. Section 5. Location of Development. The Company represents that the Development is located entirely within the jurisdictional boundaries of the City. Section 6. Tax Exempt Status of Bonds; Low Income Housing Credit. (a) The City hereby represents, covenants and agrees to and with the Company as follows: (i) that the City will not knowingly take, fail to take, or permit any action that would adversely affect the exclusion from federal income taxation of the interest on the Bonds and, if it should take, fail to take, or permit any such action, the City shall take all lawful actions that it can take to rescind or perform such actions promptly upon having knowledge thereof; (ii) that the City will take such action or actions, including consenting to an amendment of the Loan Agreement, this Regulatory Agreement, or any related document, as may be necessary in the opinion of Bond Counsel to comply fully with all applicable rules, rulings, regulations, policies, procedures or other official statements promulgated or proposed by the Depaiiment of the Treasury or the Internal Revenue Service pe1iaining to obligations issued under Section 142(d) of the Code; and (iii) that the Bonds are subject to the state volume cap for private activity bonds under Section 146 of the Code. (b) The Company hereby covenants, represents and agrees as follows: (i) that the Company will not knowingly take, fail to take, or permit any action to be taken by any person under its control that would adversely affect the exclusion from gross income under Section 103 of the Code of the interest on the Bonds and, if it should take, fail to take, or --------11ennit any2 t!£h.action,.tllil.Company_shall ... takeall. lawfuLactions_thaLit._can.takeAo-rescind-o1c.· --~-~· perform such action promptly upon having knowledge the1eof; and (ii) that the Company will take such action or actions, including amendment of the Loan Agreement, this Regulato1y Agreement, or any related document, as may be necessary, in the opinion of Bond Counsel, to comply fully with all applicable rules, rulings, regulations, policies, procedures or other official statements promulgated or proposed by the Depaiiment of the Treasury or the Internal Revenue Service pertaining to obligations issued under Section 8 Agenda Page 54 I 42(d) of the Code or the low-income housing credit allowable under Section 42 of the Code, in order to preserve the tax-exempt status of the Bonds, or such low-income housing credit and will promptly provide to the City and Trustee and to designated Bond Counsel any and all information reasonably necessary, in the opinion of Bond Counsel, to comply with any reporting requirements pe11aining to obligations issued under Section 142(d) of the Code, or such low-income housing credit and to promptly notify the City, Trustee and designated Bond Counsel should any information so provided become in any way inaccurate or incomplete, and promptly supply the additional information necessary to render the information supplied accurate and complete in all respects. Section 7. Indemnification of City and Trustee. The Company shall, to the fullest extent permitted by law, indemnify and hold harmless the City and Trustee and their officers, directors, employees and agents, from and against (a) any and all claims arising from any cause whatsoever in connection with this Regulato1y Agreement, the Loan or the Development; (b) any and all claims arising from any act or omission of the Company or any of its agents, servants, employees, or licensees in connection with this Regulatmy Agreement, the Loan or the Development; (c) any false or untrue statement or alleged false or untrue statement of a material fact contained in an official statement or other offering material relating to the offering, sale, reoffering or transfer of the Bonds or arising out of or based on any omission or alleged omission to state therein a material fact required to be stated therein or necessa,y to make the statements therein not misleading; and (d) all costs, counsel fees, expenses, and liabilities incurred in connection with any such claim or proceeding brought with respect to any thereof. The indemnity provided for in this Section shall not extend to matters arising from the willful misconduct or gross negligence of the City or the Trustee and shall not limit any other indemnity given under any other Loan Document. If any action or proceeding is brought against the City or Trustee, as the case may be, or any of their respective officers, directors, officials or employees with respect to which indemnity may be sought hereunder, the Company, upon written notice from the indemnified party, shall assume the investigation and defense thereof, including the employment of counsel acceptable to the City or Trustee, as the case may be, and the payment of all expenses. The indemnified paiiy shall have the right to employ separate counsel in any such action or proceeding and to participation in the defense thereof, and the Company shall be required to pay the fees and expenses of such separate counsel. Notwithstanding the foregoing, the indemnification and hold harmless provisions of this Section 7 shall expressly exclude the Company's obligation to pay principal and interest with respect to the Loan, which pursuant to Section 9.13 of the Loan Agreement are non-recourse liabilities of the Company. Section 8. Consideration. The City has determined to adopt and implement the Program and to issue the Bonds to obtain moneys to carry out the Program for the purpose, among others, of inducing the Company to acquire, construct and operate the Development to provide additional decent, safe and sanitary rental housing for persons of low income in the City. In consideration of the adoption and implementation of the Program by the City and the issuance of the Bonds by the City, the Company has entered into this Regulato1y Agreement. Section 9. Reliance. The City and Company hereby recognize and agree that the represe11tati ons and SQV<"nants. set .. forth_herei11 max be rel ied .. upon .b.y_mlpeJsoRsJntexeste.dj1Lthe_Jegality'"·· -~--~ and validity of the Bonds and in the exclusion from gross income under Section I 03 of the Code of the interest on the Bonds and the Project's eligibility for low-income housing credits under Section 42 of the Code. In performing their duties and obligations hereunder, the City and Trustee may rely upon statements and certificates of the Company or Lower-Income Tenants believed to be genuine and to have been executed by the proper person or persons, and upon audits of the books and records of the Company pertaining to occupancy of the Development. In addition, the City and Trustee may consult with counsel, and the opinion of such counsel shall be full and complete authorization and protection in respect of any 9 Agenda Page 55 action taken or suffered by the City 01· Trustee hereunder in good faith and in conformity with the opinion of such counsel. Section I 0. Covenants Run With the Land; Term; Burden and Benefit. The Company hereby declares its express intent that the covenants, reservations and restrictions set forth herein shall be deemed covenants running with the land and shall pass to the Company's successors in title. Each and every contract, deed or other instrument hereafter executed covering or conveying the Land or any po1tion thereof shall conclusively be held to have been executed, delivered and accepted subject to such covenants, regardless of whether or not such covenants are set forth in such contract, deed or other instrument. Unless sooner terminated in accordance with Section 15 hereof, such covenants, reservations and restrictions as are contained in Sections 2, 3, 4 and 4A hereof shall continue in full force and effect during the respective periods set fo1th therein, it being expressly agreed and understood that the provisions hereof are intended to survive the expiration of the Loan Documents, if such expiration occurs prior to those periods. Section 11. Access to Development and to Books and Records. (a) The Company will, upon reasonable request, permit the City and Trustee to have access to, and to inspect and copy, the Company's books and records with respect to the Loan and the Development. The Company shall futther grant, upon reasonable request, access to the Development to the City or Trustee. (b) Any request for access to, or to inspect and copy, books and records shall be made in writing and shall specify the date on which such access shall be granted (and such date shall not be earlier than one day following receipt by the Company of such request). The rights granted by subsection (a) shall be exercised during normal business hours. Such rights may be exercised by a representative, employee or agent of, or counsel to, the patty making the request. Section 12. Term. The terms and provisions of this Regulatory Agreement shall become effective upon its execution and delivery. Except as otherwise provided in this Section and as otherwise provided in Section 3 hereof, this Regulatory Agreement shall remain in full force and effect for the Qualified Project Period. It is expressly agreed and understood that certain provisions hereof are intended to survive the payment of the Loan and Bonds. Notwithstanding any other provisions of this Regulatory Agreement, this entire Regulatory Agreement, or any of the provisions or Sections hereof, may be terminated upon written agreement by the City, Trustee and Company if there shall have been received an opinion of Bond Counsel that such termination will not adversely affect the exclusion from gross income under Section 103 of the Code of the interest on the Bonds. Section 13. Events of Default; Enforcement; Limitation of Liability. (a) Upon discovery by or notification to the City or Trustee of any default in the performance __ 01· _observance _of_ an)' _coyenani,-agreement or_obligatio1Loith_eComp_any-s_eLfo1tlLi1LlhiLRegulat01~~--~~~-­ Agreement, the City or Trustee shall promptly notify the Company in writing of the existence and nature of such default. If the Company defaults in the performance or observance of any covenant, agreement or obligation of the Company set forth in this Regulato1y Agreement, and if such default remains uncured for a period of 30 days after notice thereof shall have been given by the City or Trustee to the Company, with a copy of such notice to the others (or for a longer period after such notice if such default is curable but requires acts to be done or conditions to be remedied which, by their nature, cannot be done or remedied within such 30-day period, and if the Company commences same within such 30-day period and Agenda Page 56 thereafter diligently and continuously prosecutes the same to completion), then the City or Trnstee may, declare that the Company is in default hereunder and may, in addition to remedies available under the Indenture and Loan Agreement, take any one or more of the following steps, at its option: (i) by mandamus or other suit, action or proceeding at law or in equity, require the Company to perform its obligations and covenants hereunder, or e1tjoin any acts or things which may be unlawful or in violation of the rights of the City or Trnstee hereunder or under the Declaration; (ii) have access to and inspect, examine and make copies of all of the books and records of the Company pe1taining to the Development; (iii) take whatever other action at law or in equity may appear necessary or desirable to enforce the obligations, covenants and agreements of the Company hereunder; (iv) to recover any monetaiy damages suffered by the City, the Trustee, or the owners from time to time of the Bonds as a consequence of any event of default; or (v) the Trnstee may declare a default under the Indenture, and proceed with remedies available to it under the Loan Agreement, the Indenture and this Agreement. The Company hereby acknowledges and agrees that money damages will not be an adequate remedy at law for a default by the Company arising from a default hereunder, and therefore the Company agrees that the remedy of specific performance shall be available to the City or Trnstee in any such case, but without prejudice to the availability of monetmy damage remedies. The provisions of this Section shall not apply in the event of an involuntary noncompliance caused by fire, seizure, requisition, condemnation or similar event, or a change in a federal law or an action of a federal agency after the date of issuance of the Bonds, which prevents the City from enforcing the terms of this Regulatory Agreement, but only if, within a reasonable period, either the Loan is retired or amounts received as a consequence of such event are used to provide a residential rental project which meets the terms of this Regulatory Agreement. Notwithstanding the foregoing, such requirements shall continue to apply to the Development subsequent to foreclosure, transfer of title by deed in lieu of foreclosure or similar event if, at any time subsequent to such event, the obliger on the purpose investment (as defined in Section 1.148- 1 (b) of the Regulations applicable to the Code) or a related person (as defined in Section 1.103-10( e) of said Regulations) obtains an ownership interest in the Development for federal tax purposes. (b) The Trustee shall have the right, in accordance with this Section and the provisions of the Indenture, without the consent or approval of the City, to exercise any or all of the City's rights or remedies hereunder, and the City hereby irrevocably appoints the Trustee attorney-in-fact for the purpose of enforcement of this Regulatory Agreement. No delay in enforcing the provisions hereof as to any breach or violation shall impair, damage or waive the right of any patty entitled to enforce the same or to obtain relief against or recover for the continuation or repetition of such breach or violation or any similar breach or violation thereof at any later time or times. The Company agrees to pay, indemnify and hold ----~tl.,,1e_Ci!x andTruste_e_harmless ____ from ___ any-_aud_iiJLrnsts,-exp_enses __ and __ fees,-including._aJLreasonabl,'"--------------- attorneys' fees which may be incurred by the City and Trustee in enforcing or attempting to enforce this Regulatory Agreement following any event of default of the same on the patt of the Company, whether the same shall be enforced by suit or otherwise, and the reasonable fees and expenses of Bond Counsel in connection with any opinion to be rendered hereunder. (c) Notwithstanding anything else to the contrary herein, the Trustee and the City shall have the right to enforce this Regulato1y Agreement and require curing of defaults in such period as may be 11 Agenda Page 57 necessary to assure compliance with Sections 42, 142(a)(7) and 142(d) of the Code, including but not limited to the right of the City to enforce this Regulato,y Agreement in the event tl1at any of the terms and provisions of Sections 2 and 3 are violated whether or not any other party hereto takes action to enforce those provisions or requires cming of any defaults related to those provisions. (d) No remedy conferred herein or reserved to the City or Trustee is intended to be exclusive of any other available remedy or remedies, but each and eve,y such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. ( e) If the City or Trustee has instituted any proceeding to enforce any right or remedy under this Regulatory Agreement and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the City, then and in eve1y such case the Company, City and Trustee shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the City and Trustee shall continue as though no such proceeding has been instituted. (f) No delay or omission of the City or Trustee to exercise any right or remedy provided hereunder upon an event of default (except a delay or omission pursuant to a written waiver) shall impair any such right or remedy or constitute a waiver of any such event of default or acquiescence therein. Eve,y right and remedy given by this Section 13 or by law to the City or Trustee may be exercised from time to time, and as often as may be deemed expedient by the City or Trustee, as the case may be. The special limited partners or the investor limited partners of the Company shall have the same rights as the Company to cure an event of default hereunder. Section 14. Governing Law. This Regulatory Agreement shall be governed by the laws of the State of Minnesota except to the extent that laws of the United States of America may prevail. Section 15. Amendment; Termination. (a) The provisions of this Regulatory Agreement shall not be amended, terminated or deleted prior to the stated term set forth in this Regulato1y Agreement except by an instrument in writing duly executed by the City, Trustee (if any Bonds remain outstanding) and the Company or their respective successors or assigns, or in accordance with paragraph (d) of this Section 15; provided, that the provisions of Section 3 hereof shall be terminated automatically upon expiration of the Qualified Project Period. Unless sooner terminated or amended or deleted from this Regulatory Agreement as in this Section provided, each of the covenants and restrictions set fo1th in this Regulatmy Agreement above shall continue in full force and effect during the Qualified Project Period, and shall thereupon terminate and be of no further force and effect, it being expressly agreed and understood that the provisions of this Regulatory Agreement are intended to survive the expiration and satisfaction of any security instruments placed of record evidencing and securing financing arrangements made for the acquisition and construction.of Jhe J)cvelonm~nt,jf snc!Lexpiration .. andsalisfactimLo.c.cm:s.p1:ioLto.the.expi ratio1Lof.th,~~~--~ Qualified Project Period. (b) At any "Appropriate Time", as hereinafter defined, the Company, or its successors or assigns, may request that the City and (if any Bonds then remain outstanding) the Trustee execute and deliver to the then-owner of the Development a Ce1tificate of Amendment or Termination or Deletion of Covenants in the form attached to this Regulatory Agreement as Exhibit C, which Certificate shall have been previously executed by the Company, its successor or assigns. If the Company's request is made at 12 Agenda Page 58 an "Appropriate Time", the City and (if any Bonds then remain outstanding) the Trustee will execute and deliver to the Company, the Ce,tificate of Amendment or Termination or Deletion of Covenants. Any such ce1tification entered into by the City and (if any Bonds then remain outstanding) the Trustee shall be (and it shall be so provided in the ce1tification itself) a conclusive determination of the amendment or the satisfaction and termination or deletion of the covenants and restrictions in this Regulato1y Agreement with respect to the obligations of the Company and its successors and assigns under this Regulat01y Agreement, it being the intention of the City that upon the execution and filing of any amendment such covenants and restrictions shall thereafter and for all purposes be modified and amended and that upon the granting and filing of any termination or deletion such covenants and restrictions shall thereafter for all purposes be forever terminated or deleted from this Regulatory Agreement. (c) It shall be an "Appropriate Time" for the City's and (if any Bonds then remain outstanding) the Trustee's execution and delivery of the Certificate of Amendment or Termination or Deletion of Covenants with respect to termination or deletion at the expiration of the stated term of such covenants and restrictions as set forth in this Regulat01y Agreement. It shall also be an "Appropriate Time" for execution and delive1y by the City and the Trustee if the requirements of clauses (i) and (ii) in the definition of "Qualified Project Period" have been met. In which case, the City and the Trustee shall deliver the executed Ce,tificatc of Amendment or Termination or Deletion of Covenants to the Company, or other appropriate third paity, to hold in escrow until termination of any assistance provided with respect to the Development under Section 8 of the United States Housing Act of 1937. It shall also be an "Appropriate Time" for the execution and delivery of the Ce1tificate of Amendment or Termination or Deletion of Covenants if the Company delivers to the City and (if any Bonds then remain outstanding) the Trustee, a written opinion of Bond Counsel addressed to the Company, the City and (if the Bonds then remain outstanding) the Trustee to the effect that the amendment or earlier termination or deletion from this Regulatory Agreement of such covenants and restrictions will not adversely affect the exemption from federal income taxation of interest already received or to be received on the Bonds. Such opinion of Bond Counsel shall clearly state whether it addresses amendment, termination or deletion of the covenants and restrictions hereof and shall specify the applicable paragraph of Exhibit D to be included in the Ce1tificate of Amendment or Termination or Deletion of Covenants. Upon receipt of such request of the Company and accompanying opinion, the City and (if any Bonds then remain outstanding) Trustee shall execute and deliver the Ce1tificate ofTennination or Deletion of Covenants to the Company. ( d) The provisions hereof shall be deemed to be no longer in effect in the event of noncompliance with the provisions of Sections 142(a)(7) and 142(d) of the Code and Treasury Regulations promulgated or proposed thereunder or applicable thereto if such noncompliance is caused by involuntary loss caused by fire, seizure, requisition, foreclosure, transfer of title by deed in lieu of foreclosure, change in federal law or an action of a federal agency after the date of issue of the Bonds (which change in law or action prevents the City from enforcing the requirements hereof), or condemnation or similar events, but only if within a reasonable period a principal amount of the Bonds equal to the outstanding principal amount of the Loan are paid and redeemed. To evidence an event of the kind stated in this paragraph (d), the City, if requested by the Trustee, or other appropriate person shall execute and deliver a Certificate of Termination of Covenants in substantially the form of Exhibit C attached hereto upon receipt of an opinion of Bond Counsel to the effect that termination of this -----R-e~g~t-1 l-at-o~ry~Agree1nentas .a result of such event ,vilLngt adversely. affect.the.e){emptio11Jro1n fi,dernl iI1co111e taxaifo11 of inte;:est received or to be received on the Bonds. If the Bonds are not paid and redeemed, either (a) any amounts received as a consequence of such event shall be used to provide a project which meets the requirements of Sections 142(a)(7) and 142(d) of the Code and Treasury Regulations promulgated or proposed thereunder or applicable thereto or (b) the Trustee, or other person shall expressly assume the obligations of the Company thereunder and shall fmther agree to be bound by and comply with the terms of this Regulatmy Agreement. The provisions of this paragraph (d) shall be 13 Agenda Page 59 deemed to be inoperable, and the requirements hereof shall continue in effect, if the operation of this paragraph (d) would subject the interest on the Bonds to federal income taxation. Section 16. Additional Covenants of the Company. (a) The Company hereby covenants to keep and perform faithfully all of its covenants and unde1takings contained herein and in the Loan Agreement, and the Related Documents, but subject to Section 9.13 of the Loan Agreement, which provides that certain obligations under the Loan Agreement and Related Documents are non-recourse liabilities of the Company. (b) The Company hereby covenants to maintain its existence under all applicable laws and regulations and to commit or suffer no act that would alter its legal existence which would impair the tax exempt status of the Bonds. (c) The Company hereby covenants to execute and deliver such additional instruments and to perform such additional acts as may be necessary, in the reasonable opinion of the City, to carry out the intent hereof and of the agreements and instruments related hereto or to perfect or give further assurances of any of the rights granted or provided for herein or in the agreements and instruments related hereto. (d) The Company hereby covenants to advise the City and Trustee promptly in writing of the occurrence of any default hereunder or any event which, with the passage of time or service of notice, or both, would constitute a default hereunder, specifying the nature and period of existence of such event and the actions being taken or proposed to be taken with respect thereto. ( e) The Company hereby covenants that no information, ce1tificate, statement in writing or report required hereby to be delivered to the City or Trnstee or both will contain any untrue statement or a material fact or omit a material fact necessaiy to make such information, certificate, statement or repmt not misleading. (J) The Company hereby covenants that neither it nor any "related person" (as defined in Section 144(a)(3) of the Code) has acquired, or shall acquire, pursuant to any arrangement, formal or informal, Bonds in an amount related to the amount of the Loan. Section 17. Notices. Any notice required to be given hereunder shall be given by registered or certified mail at the addresses specified below or at such other addresses as may be specified in writing by the parties hereto: City: Trustee: City of Albe1tville 5959 Main Avenue NE Albe1tville, Minnesota 5530 I Attn: City Administrator U.S. Bank National Association .6OLivingstQn l\ye11ue St. Paul, Minnesota 55107-2292 Attn: Corporate Trust Department 14 Agenda Page 60 Company: With a copy to: With a copy to: With a copy to: Albe1iville Leased Housing Associates III, LP c/o Dominium Development & Acquisition, LLC 2905 Northwest Boulevard, Suite 150 Plymouth, Minnesota 55441-2644 Attn: Paul Sween and Ryan Lunderby Winthrop & Weinstine P.A. 222 South Sixth Street, Suite 3500 Minneapolis, MN 55402-4629 Attn: Todd Urness, Esq. and John M. Stern, Esq. Stratford Capital Group, LLC 100 Corporate Place, Suite 404 Peabody, MA O 1960 Attn: Benjamin D. Mottola DLA Piper LLP (US) 203 N. LaSalle Street, Suite 1800 Chicago, IL 6060 I Attn: Gregory R.A. Dahlgren, Esq. Section 18. Severability. If any provision of this Regulat01y Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions shall not in any way be affected or impaired. Section 19. Multiple Counterpmis. This Regulatmy Agreement may be simultaneously executed in multiple counterpmis, all of which shall constitute one and the same instrument and each of which shall be deemed to be an original. Section 20. Limitation of City Liability. It is understood and agreed by the Company that no covenant of the City herein shall give rise to a pecuniary liability of the City or a charge against its general credit or taxing powers. It is further understood and agreed by the Company that the City shall not incur any pecuniary liability hereunder, and shall not be liable for any expenses related hereto, including administrative expenses and fees and disbursements of the City's attorney, Bond Counsel and any consultant retained in connection herewith, all of which expenses the Company agrees to pay. It is further agreed that no covenant or agreement contained herein shall be deemed to be the covenant or agreement of any member of the City, or any officer, agent, employee or representative of the City or Trustee, in his or her individual capacity, and none of such persons shall be subject to any personal liability or accountability by reason of the execution hereof, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty, or otherwise. Section 21. Change in Use. The Company understands that Section l 50(b)(2) of the Code . provides thatiftlwreguire1nentsfor. a "gltaJifiedresidential. rental .proje.ct'' are~noLmeLundeLSection------ l 42(d) with respect to the Development, no deduction shall be allowed for interest paid on the Bonds which accrues during the period beginning on the first day of the taxable year in which the Development, fails to meet such requirements and ending on the date the Development respectively meets the requirements. Section 22. Recording. This Regulatory Agreement shall be recorded in the Office of the County Recorder of Wright County, Minnesota. 15 Agenda Page 61 Section 23. Actions by City. Whenever any action is required to be taken by the City under the Loan Documents or the Indenture such action shall not be required until the City is assured to its reasonable satisfaction that its fees and expenses, including attorneys fees, incurred in taking such action will be paid by the Company. The Company shall promptly provide such assurances when required. (The remainder of this page is intentionally left blank.) 16 Agenda Page 62 IN WilNESS WHEREOF, the City, the Trustee and the Company have caused this Agreement to be signed by their duly authorized representatives, all as of the date first written hereinabove. CITY OF ALBERTVILLE, MINNESOTA ST A TE OF MINNESOTA ) ) ss. COUNTY OF WRIGHT ) The foregoing instrument was acknowledged before me this J.3. day of December, 20 I 0, by 1<>Y\ \(. \.e.~lf the Mayor of the City of Albertville, Minnes~va·,nnesota municipal corporation, on behalf of said City. // (SEAL) Tracey Nubbe Notary Public ,,, Minnesota ~~f.:5l~~•s Januruy 31, 2012 STATE OF MINNESOTA ) ) ss. COUNTY OF WRIGHT ) L The foregoing instrument was acknowledged before me this I 3 day of December, 20 I 0, by 6-~ f ':'.\ \<'., !'U5-e__ the City Administrator of th • of Albe • le, Minnesota, a Minnesota municipal' corporation, on behalf of said City, (SEAL) Regulatory Agreement relating to Multifamily Housing Revenue Bonds (Albe1tville Meadows Apartments Project), Series 20 I 0 S-1 Agenda Page 63 STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) ALBERTVILLE LEASED HOUSING ASSOCIATES III, LP, a Minnesota limited partnership By: Albe1tville Leased Housing Associates III, LLC, a Minnesota limited liability company Its: General Partner By: Paul R. Sween, Vice President The foregoing instrument was acknowledged before me this j?, day of December, 2010, by Paul R. Sween, the Vice President of Albertville Leased Housing Associates III, LLC, a Minnesota limited liability company, general paitner in Albe1tville Leased Housing Associates III, LP, a Minnesota limited pmtnership, on behalf of said limited paitnership. (SEAL) ERIN M. McFARLAND Notary Public Stata of Minnesota Ml Commission Expires Janufif)' 31, 2013 Regulatory Agreement relating to Multifamily Housing Revenue Bonds (Albe1tville Meadows Apartments Project), Series 20 I 0 S-2 Agenda Page 64 U.S. BANK NATIONAL ASSOCIATION STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this 17th day of December, 20 I 0, by Theresa Loeffler, a Vice President of U.S. Bank National Association, a natif'nal banking association, on bellalfof said association. V / I /) ' (SEAL) ' J G . KIMBERLY K GANLEY Notary Public ► Minnesota r., ._., Comaabl ~ m.ay31, !015 ► Regulatory Agreement relating to Multifamily Housing Revenue Bonds (Albertville Meadows Apartments Project), Series 20 I 0 S-3 Agenda Page 65 EXHIBIT A Legal Description of Project Premises Parcel 1: Lot 2, Block 1, Wcstwind Third Addition Parcel 2: The benefit of the Cross Access Easement created in Easement Agreement dated October 3, 2008, filed October 8, 2008, as Document No. A 1099778, as amended by Corrective Amendment to Easement Agreement dated June 15, 2009, as Document No. A 1120985 A-1 Agenda Page 66 EXHIBITB Certification of Continuing Program Compliance Witnesseth that on this __ day of ______ , -~' the undersigned ("Company"), having received proceeds of the City of Albertville, Minnesota, $4,750,000 Multifamily I-lousing Revenue Bonds (Albertville Meadows Apartments Project), Series 2010 for the purpose of financing a multifamily housing development located in the City of Albertville, Minnesota (the "Development"), does hereby ce1iify that the Development is in continuing compliance with the Regulato1y Agreement, dated as of December I, 20 I 0, executed by the Company, with respect thereto and filed in the official public records of Wright County, Minnesota (including the requirement that all units be and remain rental units), that a Ce1iification of Tenant Eligibility is attached hereto for each new tenant in such Development since the filing of the last such certification and that the same are true and correct to the best of the Company's knowledge and belief. The Company certifies that as of the date hereof at least 40% of the residential dwelling units in the Development are occupied or held open for occupancy by Lower Income Tenants, as defined and provided in the Regulatory Agreement. ALBERTVILLE LEASED HOUSING ASSOCIATES III, LP By: Albertville Leased Housing Associates 111, LLC Its: General Pminer By: Its: B-1 Agenda Page 67 EXHIBITC Certification of Amendment or Termination or Deletion of Covenants WHEREAS, the City of Albe1tville (the "City"), Minnesota, Albe1iville Leased Housing Associates III, LP (the "Company") and U.S. Bank National Association, a national banking association (the "Trustee") have executed a certain Regulatory Agreement, dated as of December I, 2010 (the "Agreement") recorded on December_, 2010, in the office of the County Recorder for Wright County, Minnesota, as Document No. _____ , with respect to the following described land, to-wit: Parcel 1: Lot 2, Block 1, Westwind Third Addition Parcel 2: The benefit of the Cross Access Easement created in Easement Agreement dated October 3, 2008, filed October 8, 2008, as Document No. A I 099778, as amended by Corrective Amendment to Easement Agreement dated June 15, 2009, as Document No. Al 120985 WHEREAS, the Agreement contained ce1tain covenants and restrictions which were intended to run with the land and be binding upon the Company, its successors and assigns; WHEREAS, the City and the Trustee, their successors and assigns, were given in the Agreement the full and absolute right and obligation to amend or terminate or delete such restrictions and to execute and deliver this Certificate for and on behalf of all persons and entities who might have been benefittcd by such covenants and restrictions; and WHEREAS, under the terms and provisions of Section 15 of the Agreement it is now an Appropriate Time (as such term in defined in the Agreement) to deliver this Ce1tificate and to amend or term in ate or delete such covenants and restrictions; NOW, THEREFORE, This is to ce1iify that [DELETE (a) or (b) IF INAPPLICABLE]: (a) the covenants and restrictions set fmih in the Agreement arc null and void and of no further force or effect; the [Registrar of Titles] in and for the County of Wright and State of Minnesota is hereby authorized to accept this instrument for recording as a conclusive determination of the termination and release of all covenants and restrictions set forth in the Agreement, as specified and as a complete termination of all rights and other remedial provisions of the Agreement or (b) the covenants and restrictions set forth as specified in _________ , of the Agreement are hereby deleted from the Agreement, provided . that deletion of such covenantsandn:strictions Jrnn1the Reg11lato1-y-Agrgement slmll110t affoc~t~c~o~v~e1~1a~11~ts~ ... ·~· -~~-- and restrictions contained in any document or instrument delivered in connection with the issuance of the $4,750,000 Multifamily Housing Revenue Bonds (Albe11ville Meadows Apartments Project), Series 2010, issued by the City, or the enforceability thereof against successors and assigns of the Company in accordance with the terms thereof; the [Registrar of Titles] in and for the County of Wright and State of Minnesota is hereby authorized to accept this instrument for recording as a conclusive determination of the deletion from the Agreement [of all covenants and restrictions set forth in the Agreement] [of the following specified Sections set forth in the Agreement:. _______ _ C-1 Agenda Page 68 Dated this __ day of _______ , -~ CITY OF ALBERTVILLE, MINNESOTA By: ----------------~ Its: Mayor By: --------------- Its: City Administrator ALBERTVILLE LEASED HOUSING ASSOCIATES III, LP By: Albe1tville Leased Housing Associates III, LLC, a Minnesota limited liability company, Its: General Partner By: ----------------~ Its: U.S. BANK NATIONAL ASSOClA TION C-2 Agenda Page 69 EXHIBITD Income Computation and Certification Lower Income Tenants (to be revised per current regulations, as necessaty) Development: Albertville Meadows Apaitments Address: 10740 County Road 37, Albe,tville, Minnesota Company: Albe,tville Leased Housing Associates III, LP, a Minnesota limited paiinership I/We, the undersigned, being first duly sworn, 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 apatiment development for which application is made, all of whom are listed below: 2 3 4 5 Name of Members Relationship of the to Head of Social Security Place of Household Household Age Number Employment HEAD SPOUSE Income Computation 6. The anticipated income of all the above persons dming the 12-month period beginning this date, a. mclua111g~a11 wages~anu salanes; oVNi1mc pay, co111n11ss1ons; fees, lips anc:1 llo1iuses before payroll deductions, net income from the operation of a business or profession or from the rental of real or personal prope1ty (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, workmen's compensation and severance pay; the maximum amount of public assistance D-1 Agenda Page 70 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 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 such purposes; special pay to a serviceman head of a family who 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 paiticipation in ACTION volunteer programs, s as follows: $. ___ _ 7. If any of the persons described above ( or whose income or contributions was included in item 6) has any savings, bonds, equity in real prope1ty 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 item 6: $ . ___ _ 8. Students: a. Will all of the persons listed in column I 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 We acknowledge that all of the above information is relevant to the status under federal income tax law of the interest on the bonds or other obligations issued to finance the apa11ment for which application is being made. We consent to the disclosure of such information to the City as issuer of such Bonds or other obligations, the holders of such Bonds or other obligations and any trustee acting on their --------behalf.,--------------------------------------------------------- THE UNDERSIGNED HEREBY CERTIFY THAT THE INFORMATION SET FORTI-I ABOVE IS TRUE AND CORRECT. THE UNDERSIGNED ACKNOWLEDGE TI-IA T THE LEASE FOR THE UNIT TO BE OCCUPIED BY THE UNDERSIGNED WILL BE CANCELED UPON TEN (10) DAYS WRITTEN NOTICE IF ANY OF THE INFORMATION ABOVE IS NOT TRUE AND CORRECT. 0-2 Agenda Page 71 Tenant Tenant Subscribed and sworn to before me this day of ____ ~, . (Notary Seal) Notary Public in and for the State of ____ _ My Commission Expires: _______ _ D-3 Agenda Page 72 FOR COMPLETION BY COMPANY (OR ITS MANAGER) ONLY I. Calculation of eligible tenant income: a. Enter amount entered for entire household in 6 above: $. ___ _ b. If the amount entered in 7.a above is greater than $5,000, enter the greater of (i) the amount entered in 7.b less the amount entered in 7.c or (ii) 10% of the amount entered in 7.a.: $. ___ _ c. TOTAL ELIGIBLE INCOME (Line I.a plus line l.b): $ ___ _ 2. The amount entered in l .c is less than or equal to 60% of Median Income for the area in which the Development is located, as defined under the Regulato1y Agreement ("Lower Income Tenant''). 3. Number of apmiment 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. THE UNDERSIGNED HEREBY CERTIFIES TBA T 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. ALl41-51 (BWJ) 376341v4 DOMINIUM MANAGEMENT SERVICES, LLC By: Its ----------------~ D-4 Agenda Page 73 Execution Copy Doc. No. A 1165114 OFFICE OF THE COUNTY RECORDER WRIGHT COUNTY, MINNESOTA Certified Filed and/or Recorded on 12-22-2010 at 10:24 Check#: 20796 Fee: $ 46.00 Payment Code 02 Addi. Fee Barb Gabrelcik, County Recorder REGULA TORY AGREEMENT (SUBORDINATE NOTE) AMONG CITY OF ALBERTVILLE, MINNESOTA, U.S. BANK NATIONAL ASSOCIATION AND ALBERTVILLE LEASED HOUSING ASSOCIATES III, LP Dated as of December 21, 2010 This instrument was drafted by: Kennedy & Graven, Chaitcrcd (BWJ) ------~4uc7Q_U.S. BankPJazaL-----------~---~---~~----~-------- 200 South Sixth Street Minneapolis, Minnesota 55402 \tg:,~ ~-. Comrnmcial Partners Title, LLC 200 South Sixth Street Suite 1'100 Minneapolis, MN 5~~ , '01-'blo 1()\11 ~ Agenda Page 74 Section I. Section 2. Section 3. Section 4. Section 4A. Section 5. Section 6. Section 7. Section 8. Section 9. Section JO. Section I I. Section 12. Section 13. Section 14. Section I 5. Section 16. Section 17. Section I 8. Section 19. Section 20. Section 21. Section 22. Section 23. Section 24. EXHIBIT A EXHIBIT 13 EXHIBIT C EXHIBITD TABLE OF CONTENTS Definitions and Interpretation ....................................................................................... 2 Federal Requirements; Residential Rental Property ..................................................... 5 Lower Income Tenants; Federal Income Tax Law ....................................................... 5 Multifamily Housing Development; Compliance With Ce1tain State Statutory Requirements ........................................................................... 7 Multifamily Housing Development; Compliance With Ce1tain State Statutory Requirements ........................................................................... ? Tax Exempt Status of Note; Low Income Housing Credit ........................................... 8 Indemnification of Issuer and Holder ........................................................................... 9 Consideration .............................................................................................................. IO Reliance ...................................................................................................................... 1 O Covenants Run With the Land; Term; Burden and Benefit.. ...................................... IO Access to Project and to Books and Records .............................................................. I 0 Tenn ............................................................................................................................ I I Events of Default; Enforcement; Limitation ofLiability ............................................ 11 Governing Law ........................................................................................................... 13 Amendment; Termination ........................................................................................... 13 Additional Covenants of the Borrower ....................................................................... 14 Notices ........................................................................................................................ 15 Severability ................................................................................................................. 16 Multiple Counterpa1is ................................................................................................. 16 Limitation of Issuer Liability ...................................................................................... 16 Change in Use ............................................................................................................. 16 Recording .................................................................................................................... 16 Actions by Issuer ........................................................................................................ 16 Appointment of Successor to Holder .......................................................................... 16 Location of Project.. .................................................................................................... 17 Legal Description ..................................................................................................... A-1 Ce1iification of Continuing Program Compliance .................................................... 13-l Certification of Amendment or Termination or Deletion of Covenants ................... C-1 Income Computation and Certification .................................................................... D-1 Agenda Page 75 REGULATORY AGREEMENT THIS REGULATORY AGREEMENT (this "Regulatory Agreement") dated as of December 21, 20 I 0, by and among Albe1tville Leased Housing Associates III, LP, a Minnesota limited partnership, and its successors and assigns (the "Borrower"), U.S. Bank National Association (the "Bank") on behalf of the holder of the Note ( defined below), and the City of Albertville, Minnesota, a municipal corporation of the State of Minnesota, organized and existing pursuant to the Constitution and laws of the State of Minnesota (the "Issuer"); WITNESS ETH WHEREAS, the Borrower proposes that the Issuer assist in financing the acquisition and renovation of a 75-unit multifamily rental housing development located at I 0740 County Road 37 in the City as legally described in Exhibit A attached hereto (the "Project"); and WHEREAS, the Issuer will issue its (i) Multifamily Housing Revenue Bonds, (Albertville Meadows Apaiiments Project), Series 20 l O (the "Bonds"), in the original aggregate principal amount of [$4,750,000], pursuant to an Indenture of Trust, dated as of December 1, 2010, between the Issuer and the Bank, as Trustee, as senior financing, and (ii) Subordinate Multifamily Housing Revenue Note, (Albertville Meadows Apai1ments Project), Series 2010 (the "Note"), in the original aggregate principal amount of $3,300,000, as subordinate financing. The Borrower and the Issuer will enter into a Subordinate Loan Agreement, dated as of December 21, 20 IO (the "Subordinate Loan Agreement''), relating to the Note which will be issued Albertville Leased Housing Associates, Limited Pminership (the "Holder") evidencing the obligation to pay a portion of the purchase price of the Project; and WHEREAS, interest on the Note paid to the registered owners of the Note is exempt from federal income tax if the Project continuously complies with Sections 142(d) or any successor provisions of the Internal Revenue Code of 1986, as amended, and Treasury Regulations applicable thereto (collectively, the "Code") and other applicable provisions of the Code are met; and WHEREAS, compliance by the Project with Minnesota Statutes, Chapter 462C and Chapter 474A (collectively, the "Act") and with Section 142(d) or any successor provisions of the Code is in large part within the control of the Borrower; and WHEREAS, the Issuer is unwilling to provide Note proceeds to finance the Project unless the Borrower shall, by entering into this Regulatory Agreement, consent to be regulated by the Issuer and the Bank to assure compliance with the Act and to preserve the tax-exempt status of the Note under Sections 142(d) or any successor provision of the Code; NOW, THEREFORE, in consideration of the mutual premises and covenants hereinafter set fo1ih, and of other valuable consideration, the Borrower, the Issuer and the Bank agree as follows: Agenda Page 76 AGREEMENT Section I. Definitions and Interpretation. Unless otherwise expressly provided herein or unless the context clearly requires otherwise, the following terms shall have the respective meanings set forth below for all purposes of this Regulatory Agreement: "Act" shall mean Minnesota Statutes, Chapters 462C and 474A, as amended; "Adjusted Family Income" means the adjusted gross income of a person (together with the adjusted gross income of all persons who intend to reside with such person in a single residential rental unit), for the applicable Certification Year, as ce1tified by such person in conformance with the requirements of this Regulatory Agreement, subject to such adjustments as shall be consistent with determinations of lower-income families under Section 8 of the United States Housing Act of 1937 and the regulations promulgated thereunder; "Affiliated Party" of a person shall mean a person whose relationship to such other person is such that (i) the relationship between such persons would result in a disallowance of losses under Section 267 or 707(b) of the Code, or (ii) such persons are members of the same controlled group of corporations (as defined in Section !563(a) of the Code, except that "more than 50 percent" shall be substituted for "at least 80 percent" each place it appears therein); "Bond Closing" shall mean the Delivery Date; "Bond Counsel" shall mean the same as in the Subordinate Loan Agreement; "Borrower" shall mean Albe1tville Leased Housing Associates III, LP, a Minnesota limited paitnership, and its successors and assigns; "Ce1tification Year" means, with respect to any Lower-Income Tenant, the twelve month period which begins on the earlier of (i) the first date on which such Tenant first occupies a residential unit in the Project on a rental basis subsequent to the first date upon which such residential unit shall be available for rental subsequent to any acquisition, construction or rehabilitation financed in whole or in part from proceeds of the Loan; or (ii) the date on which such Tenant signs a lease with respect to a residential unit in the Project; "Code" shall mean the Internal Revenue Code of 1986, as amended, and any final, tempora1y or proposed regulations applicable thereto or promulgated thereunder; "Costs of Issuance" shall mean any and all costs and expenses relating to the issuance, sale and delivc1y of the Note, including, but not limited to, the underwriter's discount, all fees and expenses of ______ J_egaLcounseLrelated.to--issuance-of.the.Not(),--fina1wial-eonsultants,-feasibility-eonsultants-;-the-underwriter~----- and accountants, any fee to be paid to the Issuer, the preparation and printing of the Subordinate Loan Agreement, the Regulato1y Agreement, any offering memorandum, the Note, and all other related documents, the costs, if any, of rating the Note, and all other expenses relating to the issuance, sale and delive1y of the Note and any other costs which are treated as "issuance costs" within the meaning of Section 147(g) of the Code; "Delive1y Date" shall mean December 21, 20 ID, the date of delive1y of the Note to the Holder; 2 Agenda Page 77 "HAP Contract" means any I-lousing Assistance Payments Contract executed by and between the Borrower and a Public Agency pursuant to Section 8 of the United States I-lousing Act of 1937 (42 U.S.C. § 1437 I); "Holder" shall mean Albettville Leased I-lousing Associates, Limited Pmtnership, a Minnesota limited pattnership, its successors and registered assigns, a holder of the Note. "I-IUD" shall mean the United States Department of I-lousing and Urban Development, or any successor to its functions; "Issuer" shall mean the City of Albettville, Minnesota, a municipal organization and political subdivision under the laws of the State of Minnesota, and any successor to its functions; "Loan" shall mean the loan of the proceeds of the Note to be made by the Issuer to the Borrower pursuant to the Subordinate Loan Agreement to provide financing for the Project; "Loan Documents" shall mean this Regulatory Agreement, the Mottgage and the Subordinate Loan Agreement; "Lower Income Tenants" shall mean and include individuals or families with Adjusted Family Income which does not exceed sixty percent (60%) of Median Income, adjusted for family size; provided that Adjusted Family Income shall be determined in a manner consistent with determinations of median. income made under the leased housing program established under Section 8 of the United States I-lousing Act of 1937, as amended and the regulations promulgated thereunder and in the manner prescribed in Treasury Regulations, Section I. I 67(k)-3(b )(3), as said Section 8 and Treasury Regulations shall be in effect on the Delivery Date. In no event, however, will the occupants of a unit be considered to be of low or moderate income if all the occupants are full-time students (as defined in Section 15l(e)(4) of the Code), no one of which is entitled to file a joint federal income tax return; "Median Income" shall mean the median gross income for the area in which the Project is located as determined from time to time by the United States Department of I-lousing and Urban Development. For purposes of determining whether Adjusted Family Income qualifies a tenant for treatment as a Lower- Income Tenant, the Median Income shall be adjusted for family size; "Mottgage" shall mean the Subordinate Mortgage, Security Agreement, Fixture Financing Statement and Assignment of Leases and Rents, dated as of December 21, 2010, executed by the Borrower in favor of the Issuer and assigned by the Issuer to the Holder pursuant to an Assignment of Subordinate Mortgage, dated as of December 21, 2010; "Note" shall mean the Issuer's $3,300,000 Subordinate Multifamily I-lousing Revenue Note (Albertville Meadows Apattments Project), Series 2010; ----------'-~'-.1:ogram'' shalLmean-the-Jssue1:'-S---program--fo1,.-.finan0ing-the-Projeet,-as--set-fo1th--in-th~----~ Subordinate Loan Agreement, and, with respect to the Project, this Regulato,y Agreement; "Project" shall mean the qualified residential rental project to be located on the real property described in Exhibit A hereto to be acquired, renovated and equipped by the Borrower and which shall be owned and operated as a multifamily rental housing development under the Act and as a qualified residential rental project within the meaning of Treasury Regulation, Section I. I 03-8(b )( 4), and Sections I42(a)(7) and 142(d) of the Code; 3 Agenda Page 78 "Project Costs" shall have the same meaning as "Costs of the Project" or "Project Costs" as defined in the Subordinate Loan Agreement; "Qualified Project Costs" shall mean the Project Costs, but only to the extent that such costs were paid or incurred by the Borrower, or any person "related" to the Borrower within the meaning of Section 144(a)(3) of the Code to the extent that (i) such costs arc chargeable to the capital account of the Project or would be so chargeable either with a proper election by the Borrower or but for a proper election by the Borrower to deduct such costs, within the meaning of Treasury Regulation, Section 1.103-8(a)(l ), as the same may be amended or supplemented from time to time, and if charged to the Project's capital account are deducted only through an allowance for depreciation, (ii) if such costs are for the Project, such costs are made exclusively with respect to a residential rental project and any functionally related and subordinate facilities thereto within the meaning of Treasury Regulation, Section I. 103-8, and (iii) such costs are not Costs of Issuance; "Qualified Project Period" shall mean a period beginning on the Delivery Date, and ending on the later of the date (i) which is fifteen (15) years after the later of the Delivery Date; (ii) the first day on which no tax-exempt private activity bonds issued with respect to the Project are outstanding; or (iii) on which any assistance provided with respect to the Project under Section 8 of the United States Housing Act of 1937 terminates (there currently is no such assistance); "Regulatory Agreement" shall mean this Regulatory Agreement among the Issuer, the Borrower and the Bank, pertaining to the Project; "Subordinate Loan Agreement" shall mean the Subordinate Loan Agreement, dated as of December 21 20 I 0, by and between the Issuer and the Borrower; "Targeted Area" shall mean a "targeted area" as defined in Minnesota Statutes, Section 462C.02, subdivision 9, as amended; and Unless the context clearly requires otherwise, words of the masculine gender shall be construed to include correlative words of the feminine and neuter genders and vice versa, and words of the singular number shall be construed to include correlative words of the plural number and vice versa. This Regulatory Agreement and all the terms and provisions hereof shall be construed to effectuate the purposes set fo1ih herein and to sustain the validity hereof. The terms and phrases used in the recitals of this Regulatory Agreement have been included for convenience of reference only and the meaning, construction and interpretation of all such terms and phrases for purposes of this Regulatory Agreement shall be determined by references to this Section. The titles and headings of the sections of this Regulatory Agreement have been inserted for convenience of reference only and are not to be considered a pait hereof and shall not in any way modify or restrict any of the terms or provisions hereof and shall never be considered or given any effect in construing this Regulatory Agreement or any provision hereof or in asce1taining intent, if any question of intent shall ....... arise. Terms and phrases used in this Regulatory Agreement and not defined herein shall have the meanings assigned to those terms in the Subordinate Loan Agreement. For the purposes of this Regulatory Agreement, the Note shall be deemed "outstanding" until it has been fully paid and retired and no longer bears interest. 4 Agenda Page 79 Section 2. Federal Requirements; Residential Rental Property. For the purpose of compliance with Sections 42, 142(a)(7) and 142(d) of the Code, the Borrower represents, warrants and agrees that: (I) The Project will be acquired and rehabilitated for the purpose of providing multifamily residential rental property and the Project constitutes and will constitute multifamily residential rental property as such phrase is used in Section 142(a)(7) of the Code; (2) At no time will either the Borrower or any Affiliated Party occupy a unit in the Project other than units occupied or to be occupied by agents, employees or representatives of the Borrower and reasonably required for the proper maintenance or management of the Project; (3) The Project shall consist of a building or structure or proximate buildings or structures, (a) each containing one or more similarly constructed residential units which are to be used on other than a transient basis and any facilities which are functionally related and subordinate to such units within the meaning of Sections 142(a)(7) and 142(d) of the Code, (b) each unit in the Project is to be rented or available for rental on a continuous basis to members of the general public in accordance with the requirements of Sections I 42(a)(7) and I 42(d) of the Code; and ( c) the Project will consist of residential rental housing facilities and facilities functionally related and subordinate thereto; (4) The Project consists of a single "project," and for this purpose, proximate buildings or structures are pa1t of the same project only if owned for federal income tax purposes by the same person and if the buildings are financed pursuant to a common plan; buildings or structures are proximate if they are all located on a single parcel of land or several parcels of land which are contiguous except for the interposition of a road, street, stream or similar property; (5) The Project shall not include any facility to be used as a hotel, motel, dormitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium, rest home, or trailer park or court; (6) The Project does not include any building or structure which contains fewer than five (5) units, one of which is occupied by an owner of the units; (7) Each dwelling unit in the Project shall consist of separate and complete facilities for living, sleeping, eating, cooking and sanitation for a single person or family; and (8) The forty percent (40%) of the units in the Project required to be occupied by Lower Income Tenants will be substantially similar to all other units in the Project, and such Lower Income Tenants will enjoy equal access to all common facilities included in the Project. Section 3. Lower Income Tenants; Federal Income Tax Law. (I) To the end of satisfying the requirements of Sections 42 and l42(d) of the Code relating to individuals of low income during the Qualified Project Period, the Borrower hereby represents, covenants and agrees as follows: (a) At all times during the Qualified Project Period, at least forty percent (40%) of the completed residential units in the Project shall be occupied by Lower Income Tenants. The Borrower has elected under Sections 42(g)(I) and 142(d)(l) of the Code to meet the "40-60 Test" 5 Agenda Page 80 of Sections 42(d)(J)(B) and 142(d)(J)(B) of the Code. For purposes of satisfying the requirements of the preceding two sentences, the following rules apply: (i) the determination of whether an individual or family is a Lower-Income Tenant shall be made initially at the time the tenancy commences and at least annually thereafter on the basis of the then current income of the tenant ( each a "Compliance Date"); (ii) if the tenant was a Lower-Income Tenant upon commencement of the tenant's occupancy, or as of any prior determination under Section 3(a)(i) and if, as of the Compliance Date, the Adjusted Family Income of the tenant is not in excess of one hundred forty percent (140%) of 60% of Median Income, the tenant shall be deemed to be a Lower-Income Tenant. If, as of such Compliance Date, the Adjusted Family Income of the individual or family is in excess of such 140% of 60% of Median Income, the tenant shall no longer be deemed a Lower-Income Tenant if after such Compliance Date, but before the next Compliance Date, any unit of comparable or smaller size in the Project is rented to a new tenant whose Adjusted Family Income exceeds the Median Income; (iii) any completed unit vacated by a Lower-Income Tenant shall be treated as being occupied by such prior Lower-Income Tenant until reoccupied, other than for a temporary period not to exceed thitty-one (3 I) days, at which time the character of the unit shall be redetermined. If necessary in order to comply with the federal occupancy percentage, the next available unit or units in the Project shall be made available only to individuals or families qualifying as Lower-Income Tenants; for this purpose the "next available unit" shall be any dwelling unit of comparable or smaller size vacated by its previous tenant. (b) The Borrower shall, upon initial occupancy and annually thereafter, obtain and maintain on file a sworn, notarized income computation and certification in the form attached hereto as Exhibit D from each Lower Income Tenant residing in the Project and each such Lower Income Tenant's Adjusted Family Income shall be computed in the manner required by Treasury Regulation, Section l. l 67(k)-3(b ), as it shall be in effect on the Delivery Date, or in such other form and manner as may be required by applicable rules, rulings, procedures, official statements, regulations or policies now or hereafter promulgated or proposed by the Department of the Treasury or the Internal Revenue Service with respect to obligations issued under Section 142(d) of the Code. (c) The Borrower shall upon initial occupancy and annually thereafter, obtain and maintain on file from each Lower Income Tenant evidence reasonably sufficient to verify the Lower Income Tenant's income and assets, including as may be necessary (i) a copy of such Lower Income Tenant's most recently filed federal income tax return, (ii) a verification from the Lower Income Tenant's employer, if any, of the Lower Income Tenant's wages and other -----~---------compensationrand-fiii~-verification-01'-othe1s-sour.ies.01'-inc0mtJc,-il'-any-.--------------~-- (d) Within ten (10) days after the initial occupancy of any unit in the Project by a Lower-Income Tenant, the Borrower will provide to the Bank, and upon request, to the Issuer, copies of such Lower-Income Tenant's income computation and certification in the form attached hereto as Exhibit D, together with the supporting documentation obtained pursuant to subsection ( d); and the Borrower will permit any duly authorized representative of the Issuer, the Bank, the 6 Agenda Page 81 ' ' Depaitment of the Treasmy or the Internal Revenue Service to inspect the books and records of the Borrower pertaining to the income of Lower Income Tenants residing in the Project. (e) The Borrower shall prepare and submit to the Bank and on or before the first day of Febrnaiy of each year during the Qualified Project Period, Ce1tificate of Continuing Compliance as to compliance with this Section 3, executed by the Borrower in substantially the form attached hereto as Exhibit B, (f) The Borrower shall submit to the Secretary of the Treasury (at such time and such manner as the Secretary shall prescribe) an annual ce1tification as to whether the Project continues to meet the requirements of subparagraph (a) above, all as required by Section 42(1)(2) and Section 142(d) of the Code, The Borrower understands that failure to make such annual ce1tification will result in a penalty to the Borrower under §66520) of the Code, (g) The fo1ty percent (40%) of the units in the Project required to be occupied by Lower-Income Tenants will be substantially similar to all other units in the Project, and such Lower-Income Tenants will enjoy equal access to all common facilities included in the Project Section 4, Requirements, Multifamily Housing Development; Compliance With Ce1tain State Statutory The Issuer and Borrower hereby declare their understanding, intent and agreement that the Project is to be owned, managed and operated as a "multifamily housing development," as such term is defined in the Act, and that the Project shall be operated in all respects in conformance with the requirements and provisions of the Act, for so long as the Note remains outstanding and unpaid, Therefore, the Borrower represents, covenants and agrees as follows for so long as the Note remains outstanding and unpaid: (I) that the Project (upon completion) shall comply with all applicable building code requirements of the Issuer; (2) to manage and operate the Project as a multifamily housing development within the meaning of the Act; (3) that the Project is the rehabilitation of an existing multifamily building which meets the requirements for minimum rehabilitation expenditures in Sections 42(e)(2) and 42(e)(3)(A) of the Code; (4) that the Project includes participation by the MHFA or the Issuer in financing the acquisition and rehabilitation of the Project; and (5) that the Project will be occupied by tenants whose incomes at the time of their initial residency meet the requirements of Section 42(g) of the Code. Section 4A . . .... Requirements Multifamily Housing Development; Compliance With Certain State Statutmy (I) As required by the Act, at least twenty percent (20%) of the units in the Project shall be occupied by tenants who are families or individuals with adjusted gross income not in excess of eighty percent (80%) of the median family income as estimated by the HUD for the standard metropolitan area including the Issuer. A tenant will continue to qualify as such as long as he or she continues to reside in such unit notwithstanding the fact that another occupant no longer resides in the unit because of death, divorce or disability. When a tenant leaves a unit, such unit will be considered occupied by a qualifying 7 Agenda Page 82 tenant for purposes of this section if it is held vacant and available for such occupancy until it is reoccupied by another tenant, other than for a temporary period which in no event shall exceed thitty-one (31) days, at which time the status of the new tenant is to be determined. (2) The Borrower recognizes that the Issuer is authorized to issue the Note to finance the Project only if the Project complies with the restrictions set fotth in Minnesota Statutes, Section 474A.047. The Borrower represents, warrants and covenants that the Project is a "project" as described in Subdivision l(a) of Section 474A.047. The Borrower covenants, consistent with the requirements of Minnesota Stah1tes, Section 474A.047, Subdivision 2, that for fifteen (I 5) years the maximum rental rates of twenty percent (20%) of the units in the Project shall not exceed the area fair market rent or exception fair market rents for existing housing, if applicable, as established by the federal Depaitment of Housing and Urban Development. The Borrower must annually ce1tify for such fifteen ( 15) years that the rental rates are within these limitations, and on request the Issuer, the Bank or the Borrower shall provide a copy of the annual ce1tification to the Minnesota Commissioner of Finance. (3) The Borrower acknowledges that Minnesota Statutes, Section 474A.047, Subdivision 3, requires that compliance with the rental rate and income requirements of this Section be monitored. The Issuer, the Bank or one or more agents acting on its or their behalf (the "Monitor") may issue an order of noncompliance if the Project is found by the Monitor to be out of compliance with these requirements. The Borrower shall pay a penalty to the Issuer equal to one-half of one percent (0.5%) of the total amount of Note issued for the Project utilizing bonding authority under Minnesota Statutes, Chapter 474A, if the Monitor issues an order of noncompliance. For each additional year the Project is out of compliance, the annual penalty must be increased by one-half of one percent (0.5%) of the total amount of such bonds. Insubstantial violations may be waived. No order of non-compliance shall become final and effective until thitty (30) days after its dated date, and such effective date shall be fmther delayed if the Borrower in good faith contests the validity or accuracy of the order. This Section 2 is limited in its entirety to applicable provisions of Minnesota Statutes, Chapters 462C and 474A, but shall not limit any other obligations of the Borrower under this Regulatory Agreement. Section 5. Tax Exempt Status of Note; Low Income Housing Credit. (I) The Issuer hereby represents, covenants and agrees to and with the Borrower as follows: (a) that the Issuer will not knowingly take, fail to take, or permit any action that would adversely affect the exclusion from federal income taxation of the interest on the Note and, if it should take, fail to take, or permit any such action, the Issuer shall take all lawful actions that it can take to rescind or perform such actions promptly upon having knowledge thereof; and (b) that the Issuer will take such action or actions, including consenting to an amendment of the Subordinate Loan Agreement, this Rcgulatoty Agreement, or any related document, as may be necessary in the opinion of Bond Counsel to comply fully with all applicable rules, rulings, regulations, policies, procedures or other official statements promulgated or proposed by the Department of the Treasmy or the Internal Revenue Service ----------pertaining..to-obligations.issued-unde1cSeeti01L142(d).o£.the-Gode.;..and---------------~ (c) that the Note is subject to the state volume cap for private activity bonds under Section 146 of the Code (2) The Borrower hereby covenants, represents and agrees as follows: 8 Agenda Page 83 (a) that the Borrower will not knowingly take, fail to take, or permit any action to be taken by any person under its control that would adversely affect the exclusion from gross income under Section I 03 of the Code of the interest on the Note and, if it should take, fail to take, or perm it any such action, the Borrower shall take all lawful actions that it can take to rescind or perform such action promptly upon having knowledge thereof; and (b) that the Borrower will take such action or actions, including amendment of the Subordinate Loan Agreement, this Regulatory Agreement, or any related document, as may be necessary, in the opinion of Bond Counsel, to comply fully with all applicable rules, rnlings, regulations, policies, procedures or other official statements promulgated or proposed by the Depa1tment of the Treasury or the Internal Revenue Service pe1taining to obligations issued under Section l42(d) of the Code or the low-income housing credit allowable under Section 42 of the Code, in order to preserve the tax-exempt status of the Note, or such low-income housing credit and will promptly provide to the Issuer and the Bank and to designated Bond Counsel any and all information reasonably necessary, in the opinion of Bond Counsel, to comply with any repo1ting requirements pe1taining to obligations issued under Section l42(d) of the Code, or such low-income housing credit and to promptly notify the Issuer, the Bank and designated Bond Counsel should any information so provided become in any way inaccurate or incomplete, and promptly supply the additional information necessary to render the information supplied accurate and complete in all respects. Section 6. Indemnification of Issuer and Holder. The Borrower shall, to the fullest extent permitted by law, indemnify and hold harmless the Issuer and the Bank and their officers, directors, employees and agents, from and against (I) any and all claims arising from any cause whatsoever in connection with this Regulatory Agreement, the Loan or the Project; (2) any and all claims arising from any act or omission of the Borrower or any of its agents, servants, employees, or licensees in connection with this Regulato1y Agreement, the Loan or the Project; (3) any false or untrue statement or alleged false or untrue statement of a material fact contained in an official statement or other offering material relating to the offering, sale, reoffering or transfer of the Note or arising out of or based on any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; and (4) all costs, counsel fees, expenses, and liabilities incurred in connection with any such claim or proceeding brought with respect to any thereof. The indemnity provided for in this Section shall not extend to matters arising from the willful misconduct or gross negligence of the Issuer or the Bank and shall not limit any other indemnity given under any other Loan Document. If any action or proceeding is brought against the Issuer or the Bank, as the case may be, or any of their respective officers, directors, officials or employees with respect to which indemnity may be sought hereunder, the Borrower, upon written notice from the indemnified party, shall assume the investigation and defense thereof, including the employment of counsel acceptable to the Issuer or the Bank, as the case may be, and the payment of all expenses. The indemnified paity shall have the right to employ separate counsel in any such action or proceeding and to paiticipation in the defense thereof, and the Borrower shall be required to pay the fees and expenses of such separate counsel. Notwithstanding the foregoing, the indemnification and hold harmless provision of this Section 6 shall expressly exclude the Borrower's obligation to pay principal and interest with respect to the Loan, which pursuant to Section 9.10 of the Subordinate Loan Agreement are non-recourse liabilities of the Borrower. 9 Agenda Page 84 Section 7. Consideration. The Issuer has adopted and implemented the Program and issued the Note to obtain moneys to carry out the Program for the purpose, among others, of inducing the Borrower to acquire, construct and operate the Project to provide additional decent, safe and sanitary rental housing for persons of low income in the Issuer. In consideration of the adoption and implementation of the Program by the Issuer and the issuance of the Note by the Issuer, the Borrower has entered into this Regulatory Agreement. Section 8. Reliance. The Issuer, the Bank and the Borrower hereby recognize and agree that the representations and covenants set forth herein may be relied upon by all persons interested in the legality and validity of the Note and in the exclusion from gross income under Section l 03 of the Code of the interest on the Note and the Project's eligibility for low-income housing credits under Section 42 of the Code. In performing their duties and obligations hereunder, the Issuer and the Bank may rely upon statements and certificates of the Borrower or Lower Income Tenants believed to be genuine and to have been executed by the proper person or persons, and upon audits of the books and records of the Borrower pertaining to occupancy of the Project. In addition, the Issuer and the Bank may consult with counsel, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by the Issuer or the Bank hereunder in good faith and in conformity with the opinion of such counsel. Section 9. Covenants Run With the Land; Term; Burden and Benefit. The Borrower hereby declares its express intent that the covenants, reservations and restrictions set forth herein shall be deemed covenants rnnning with the land and shall pass to the Borrower's successors in title. Each and every contract, deed or other instrument hereafter executed covering or conveying the land included in the Mottgaged Prope1ty or any portion thereof shall conclusively be held to have been executed, delivered and accepted subject to such covenants, regardless of whether or not such covenants are set forth in such contract, deed or other instrnment. Unless sooner terminated in accordance with Section 14 hereof, such covenants, reservations and restrictions as are contained in Sections 2, 3, 4 and 4A hereof shall continue in full force and effect during the respective periods set fo1th therein, it being expressly agreed and understood that the provisions hereof are intended to survive the expiration of the Loan Documents, if such expiration occurs prior to those periods. Section JO. Access to Project and to Books and Records. (a) The Borrower will, upon reasonable request, permit the Issuer and the Bank to have access to, and to inspect and copy, the Borrower's books and records with respect to the Loan and the Project. The Borrower shall fmther grant, upon reasonable request, access to the Project to the Issuer or the Bank. (b) Any request for access to, or to inspect and copy, books and records shall be _______ _,nade-in-w1:iting-and-shall--specif3/-the-date-on-whk,h~uGh-aGGess~hall-b~grnnted-~and~uGh-dat------ shall not be earlier than one day following receipt by the Borrower of such request). The rights granted by subsection (a) shall be exercised during normal business hours. Such rights may be exercised by a representative, employee or agent of, or counsel to, the party making the request. 10 Agenda Page 85 Section 11. The terms and provisions of this Regulatory Agreement shall become effective upon its execution and delivery. Except as otherwise provided in this Section and as otherwise provided in Section 3 hereof, this Regulatoty Agreement shall remain in full force and effect for the Qualified Project Period or, if longer, the period that the Note (or obligations issued to refund the Note) remain Outstanding. It is expressly agreed and understood that ce1tain provisions hereof are intended to survive the payment of the Loan and the Note. Notwithstanding any other prov1s10ns of this Regulatoty Agreement, this entire Regulato1y Agreement, or any of the provisions or Sections hereof, may be terminated upon written agreement by the Issuer, the Bank and the Borrower ifthere shall have been received an opinion of Bond Counsel that such termination will not adversely affect the exclusion from gross income under Section I 03 of the Code of the interest on the Note. Section 12. Events of Default: Enforcement: Limitation of Liability. (I) Upon discovery by or notification to the Issuer or the Bank of any default in the performance or observance of any covenant, agreement or obligation of the Borrower set fotth in this Regulato1y Agreement, the Issuer or the Bank shall promptly notify the Borrower in writing of the existence and nature of such default. If the Borrower defaults in the performance or observance of any covenant, agreement or obligation of the Borrower set forth in this Regulatory Agreement, and if such default remains uncured for a period of thirty (30) days after notice thereof shall have been given by the Issuer or the Bank to the Borrower, with a copy of such notice to the others ( or for a longer period after such notice if such default is curable but requires acts to be done or conditions to be remedied which, by their nature, cannot be done or remedied within such 30 day period, and if the Borrower commences same within such thitiy (30) day period and thereafter diligently and continuously prosecutes the same to completion within 120 days), then the Issuer or the Bank may, declare that the Borrower is in default hereunder and may, in addition to remedies available under the Subordinate Loan Agreement, take any one or more of the following steps, at its option: (a) by mandamus or other suit, action or proceeding at law or in equity, require the Borrower to perform its obligations and covenants hereunder, or enjoin any acts or things which may be unlawful or in violation of the rights of the Issuer or the Bank hereunder: (b) have access to and inspect, examine and make copies of all of the books and records of the Borrower pertaining to the Project: (c) take whatever other action at law or in equity may appear necessary or desirable to enforce the obligations, covenants and agreements of the Borrower hereunder: (d) to recover any monetaty damages suffered by the Issuer, the Bank, or the owners from time to time of the Note as a consequence of any event of default: or (e) the Bank may declare a default under the Subordinate Loan Agreement, and proceed with remedies available to it under the Subordinate Loan Agreement and this Agreement. The Borrower hereby acknowledges and agrees that money damages will not be an adequate remedy at law for a default by the Borrower arising from a default hereunder, and therefore the Borrower agrees that the remedy of specific performance shall be available to the Issuer or the Bank in any such case, but without prejudice to the availability of monetary damage remedies. The provisions of this 11 Agenda Page 86 Section shall not apply in the event of an involuntary noncompliance caused by fire, seizure, requisition, condemnation or similar event, or a change in a federal law or an action of a federal agency after the date of issuance of the Note, which prevents the Issuer from enforcing the terms of this Regulatory Agreement, but only if, within a reasonable period, either the Loan is retired and the Note redeemed, or amounts received as a consequence of such event are used to provide a residential rental project which meets the terms of this Regulatory Agreement. Notwithstanding the foregoing, such requirements shall continue to apply to the Project subsequent to foreclosure, transfer of title by deed in lieu of foreclosure or similar event if, at any time subsequent to such event, the obliger on the purpose investment (as defined in Section 1.148-l(b) of the Regulations applicable to the Code) or a related person (as defined in Section 1.103-1 O(e) of said Regulations) obtains an ownership interest in the Project for federal tax purposes. (2) The Bank shall have the right, in accordance with this Section and the provisions of the Indenture, without the consent or approval of the Issuer, to exercise any or all of the Issuer's rights or remedies hereunder, and the Issuer hereby irrevocably appoints the Bank attorney-in-fact for the purpose of enforcement of this Regulat01y Agreement. No delay in enforcing the provisions hereof as to any breach or violation shall impair, damage or waive the right of any party entitled to enforce the same or to obtain relief against or recover for the continuation or repetition of such breach or violation or any similar breach or violation thereof at any later time or times. The Borrower agrees to pay, indemnify and hold the Issuer and the Bank harmless from any and all costs, expenses and fees, including all reasonable attorneys' fees which may be incurred by the Issuer and the Bank in enforcing or attempting to enforce this Regulat01y Agreement following any event of default of the same on the paii of the Borrower, whether the same shall be enforced by suit or otherwise, and the reasonable fees and expenses of Bond Counsel in connection with any opinion to be rendered hereunder. (3) Notwithstanding anything else to the contra,y herein, the Bank and the Issuer shall have the right to enforce this Regulatory Agreement and require curing of defaults in such period as may be necessmy to assure compliance with Sections 42, l42(a)(7) and 142(d) of the Code, including but not limited to the right of the Issuer to enforce this Regulatory Agreement in the event that any of the terms and provisions of Sections 2 and 3 are violated whether or not any other pa1iy hereto takes action to enforce those provisions or requires curing of any defaults related to those provisions. (4) No remedy conferred herein or reserved to the Issuer or the Bank 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 hereunder or now or hereafter existing at law or in equity or by statute. (5) If the Issuer or the Bank ( on behalf of the Holder) has instituted any proceeding to enforce any right or remedy under this Regulatory Agreement and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Issuer, then and in every such case the Borrower, the Issuer and the Bank shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Issuer and Bank ( on behalf of the Holder) shall continue as though no such proceeding has been instituted. (6) No delay or omission of the Issuer or the Bank to exercise any right or remedy provided hereunder upon an event of default (except a delay or omission pursuant to a written waiver) shall impair any such right or remedy or constitute a waiver of any such event of default or acquiescence therein. Eve,y right and remedy given by this Section 13 or by law to the Issuer or the Bank may be exercised from time to time, and as often as may be deemed expedient by the Issuer or the Bank, as the case may be. 12 Agenda Page 87 Section 13. Governing Law. This Regulatory Agreement shall be governed by the laws of the State of Minnesota except to the extent that laws of the United States of America may prevail. Section 14. Amendment; Termination. (I) The provisions of this Regulatory Agreement shall not be amended, terminated or deleted prior to the stated term set fotih in this Regulatory Agreement except by an instrnment in writing duly executed by the Issuer, the Bank (if any Note principal remains outstanding) and the Borrower or their respective successors or assigns, or in accordance with paragraph (4) of this Section 14; provided, that the provisions of Section 3 hereof shall be terminated automatically upon expiration of the Qualified Project Period. Unless sooner terminated or amended or deleted from this Regulatory Agreement as in this Section provided, each of the covenants and restrictions set fotih in this Regulatory Agreement above shall continue in full force and effect while any Note (or bonds issued to refund the Note) remain Outstanding, or, with respect to Section 3 during the Qualified Project Period, and shall thereupon terminate and be of no futihcr force and effect, it being expressly agreed and understood that the provisions of this Regulatory Agreement hereof are intended to survive the expiration and satisfaction of any security instrnments placed of record evidencing and securing financing arrangements made for the acquisition and renovation of the Project, if such expiration and satisfaction occurs prior to the expiration of the Qualified Project Period. (2) At any "Appropriate Time", as hereinafter defined, the Borrower, or its successors or assigns, may request that the Issuer and (if any Note principal then remains outstanding) the Bank execute and deliver to the then-owner of the Project a Cetiificate of Amendment or Termination or Deletion of Covenants in the form attached to this Declaration as Exhibit C, which Cetiificate shall have been previously executed by the Borrower, its successor or assign. If the Borrower's request is made at an "Appropriate Time", the Issuer and (if the Note then remains outstanding) the Bank will execute and deliver to the Borrower, the Certificate of Amendment or Termination or Deletion of Covenants. Any such certification entered into by the Issuer and (if any Note principal then remains outstanding) the Bank shall be (and it shall be so provided in the certification itself) a conclusive determination of the amendment or the satisfaction and termination or deletion of the covenants and restrictions in this Declaration with respect to the obligations of the Borrower and its successors and assigns under this Regulatory Agreement, it being the intention of the Issuer that upon the execution and filing of any amendment such covenants and restrictions shall thereafter and for all purposes be modified and amended and that upon the granting and filing of any termination or deletion such covenants and restrictions shall thereafter for all purposes be forever terminated or deleted from this Regulatory Agreement. (3) It shall be an "Appropriate Time" for the Issuer's and (if any Note principal then remains outstanding) the Bank's execution and delivery of the Cetiificate of Amendment or Termination or ----~hleletion-of:Govenants-with-respeet-to·tern1ination·rn"deletiowaMhe·expiratiowuhlre·stateu·temruf·,mch·---~-~ covenants and restrictions as set forth in this Regulatmy Agreement. Prior to such expiration of the stated term, it shall be an "Appropriate Time" for the execution and delive1y of the Certificate of Amendment or Termination or Deletion of Covenants only if the Borrower delivers to the Issuer and (if any Note principal then remains outstanding) the Bank with the Borrower's request, a written opinion of Bond Counsel addressed to the Borrower, the Issuer and (if the Note principal then remains outstanding) the Bank to the effect that the amendment or earlier termination or deletion from this Regulato1y Agreement of such covenants and restrictions will not adversely affect the exemption from federal income taxation of 13 Agenda Page 88 interest already received or to be received on the Note. Such opinion of Bond Counsel shall clearly state whether it addresses amendment, termination or deletion of the covenants and restrictions hereof and shall specify the applicable paragraph of Exhibit D to be included in the Certificate of Amendment or Termination or Deletion of Covenants. Upon receipt of such request of the Borrower and accompanying opinion, the Issuer and (if any Note principal then remains outstanding) the Bank shall execute and deliver the Ce1tificate of Termination or Deletion of Covenants to the Borrower. (4) The provisions hereof shall be deemed to be no longer in effect in the event of noncompliance with the provisions of Sections 142(a)(7) and 142(d) of the Code and Treasmy Regulations promulgated or proposed thereunder or applicable thereto if such noncompliance is caused by involunta,y loss caused by fire, seizure, requisition, foreclosure, transfer of title by deed in lieu of foreclosure, change in federal law or an action of a federal agency after the date of issue of the Note (which change in law or action prevents the Issuer from enforcing the requirements hereof), or condemnation or similar events, but only if within a reasonable period a principal amount of the Note equal to the outstanding principal amount of the Loan are paid and redeemed. To evidence an event of the kind stated in this paragraph ( 4), the Issuer, if requested by the Bank, or other appropriate person shall execute and deliver a Ce1tificate of Termination of Covenants in substantially the form of Exhibit C attached hereto upon receipt of an opinion of Bond Counsel to the effect that termination of this Regulatory Agreement as a result of such event will not adversely affect the exemption from federal income taxation of interest received or to be received on the Note. If the Note is not paid and redeemed, either (i) any amounts received as a consequence of such event shall be used to provide a project which meets the requirements of Sections 142(a)(7) and 142(d) of the Code and Treasmy Regulations promulgated or proposed thereunder or applicable thereto or (ii) the Bank, or other person shall expressly assume the obligations of the Borrower thereunder and shall further agree to be bound by and comply with the terms of this Regulatory Agreement. The provisions of this paragraph ( 4) shall be deemed to be inoperable, and the requirements hereof shall continue in effect, if the operation of this paragraph ( 4) would subject the interest on the Note to federal income taxation. (5) The provisions of this Regulatory Agreement may be amended to take into account any additional series of refunding bonds issued to redeem the remaining outstanding Note. Section 15. Additional Covenants of the Borrower. (I) The Borrower hereby covenants to keep and perform faithfully all of its covenants and unde1takings contained herein and in the Subordinate Loan Agreement and the Loan Documents, but subject to Section 9.10 of the Subordinate Loan Agreement, which provides that ce1tain obligations under the Subordinate Loan Agreement and the Loan Documents are non-recourse liabilities of the Borrower. (2) The Borrower hereby covenants to maintain its existence under all applicable laws and regulations and to commit or suffer no act that would alter its legal existence which would impair the tax exempt status of the Note. (3) The Borrower hereby covenants to execute and deliver such additional instrnments and to -----~pe1:foi:m-such-additional-acts-as-may-be-necessary,---in-the-reasonable--opinion-ol'-the-lssuer,-to·cany-ouHhe--~--9 intent hereof and of the agreements and instrnments related hereto or to perfect or give fu1ther assurances of any of the rights granted or provided for herein or in the agreements and instrnments related hereto. ( 4) The Borrower hereby covenants to advise the Issuer and the Bank promptly in writing of the occurrence of any default hereunder or any event which, with the passage of time or service of notice, or both, would constitute a default hereunder, specifying the nature and period of existence of such event and the actions being taken or proposed to be taken with respect thereto. 14 Agenda Page 89 (5) The Borrower hereby covenants that no information, ce1tificate, statement in writing or report required hereby to be delivered to the Issuer or the Bank or both will contain any untrue statement or a material fact or omit a material fact necessary to make such information, certificate, statement or reprnt not misleading. ( 6) The Borrower hereby covenants that neither it nor any "related person" ( as defined in Section 144(a)(3) of the Code) has acquired, or shall acquire, pursuant to any arrangement, formal or informal, any interest in the Note in an amount related to the amount of the Loan. Section 16. Notices. Any notice required to be given hereunder shall be given by registered or ce1tified mail at the addresses specified below or at such other addresses as may be specified in writing by the parties hereto: Issuer: Holder: Bank: City of Albe1tville 5959 Main Avenue Northeast Albe1tville, MN 5530 I Attn: City Administrator Albe1tville Leased Housing Associates, Limited Partnership 2905 Nmthwest Boulevard, Suite 150 Plymouth, MN 55441 Attn: Armand E. Brachman and Ryan Lunderby U.S. Bank National Association Corporate Trust Services 60 Livingston Avenue, 3rd Floor EP-MN-WSJC St. Paul, MN 55107 Attn: Corporate Trust Services Borrower: Albe1tville Leased Housing Associates III, LP 2905 No1thwest Boulevard Suite 150 Plymouth, MN 55441 Attn: Paul R. Sween and Ryan Lunderby With a copy to: Winthrop & Weinstine, P.A. 225 South Sixth Street, Suite 3500 Minneapolis, MN 55402-4629 Attn: Todd Urness, Esq. and John M. Stern, Esq. -----------=Jth-a-copy-to~~ -Stratford-Gapital-Gmup,-1,1,,tc-,-----~-----~-~-------~-~ l00 Corporate Place, Suite 404 Peabody, MA 01960 Attention: Banjamin D. Mottola 15 Agenda Page 90 With a copy to: DLA Piper LLP (US) Section 17. 203 N LaSalle Street, Suite 1800 Chicago, IL 60601 Attention: Gregory R.A. Dahlgren, Esq. Sevcrability. If any provision of this Regulatory Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining po1iions shall not in any way be affected or impaired. Section 18. Multiple Counterparts. This Regulatory Agreement may be simultaneously executed in multiple counterpa1is, all of which shall constitute one and the same instrnment and each of which shall be deemed to be an original. Section 19. Limitation oflssucr Liability. It is understood and agreed by the Borrower that no covenant of the Issuer herein shall give rise to a pecuniary liability of the Issuer or a charge against its general credit or taxing powers. It is fmiher understood and agreed by the Borrower that the Issuer shall not incm any pecuniary liability hereunder, and shall not be liable for any expenses related hereto, including adminish·ative expenses and fees and disbursements of the Issuer's attorney, Bond Counsel and any consultant retained in connection herewith, all of which expenses the Borrower agrees to pay. It is further agreed that no covenant or agreement contained herein shall be deemed to be the covenant or agreement of any member of the Issuer, or any officer, agent, employee or representative of the Issuer or the Bank, in his or her individual capacity, and none of such persons shall be subject to any personal liability or accountability by reason of the execution hereof, whether by viiiue of any constitution, statute or rnlc of law or by the enforcement of any assessment or penalty, or otherwise. Section 20. Change in Use. The Borrower understands that Section l S0(b )(2) of the Code provides that if the requirements for a "qualified residential rental project" are not met under Section 142( d) with respect to the Project, no deduction shall be allowed for interest paid on the Note which accrues during the period beginning on the first day of the taxable year in which the Project, fails to meet such requirements and ending on the date the Project respectively meets the requirements. Section 21. Recording. This Regulatory Agreement shall be recorded in the Office of the County Recorder of Wright County, Minnesota. Section 22. Actions by Issuer. Whenever any action is required to be taken by the Issuer under the Loan Documents or the Indentme such action shall not be required until the Issuer is assured to its reasonable satisfaction that its fees and expenses, including attorneys fees, incmred in taking such action will be paid by the Borrower. The Borrower shall promptly provide such assurances when required. 16 Agenda Page 91 Section 23. Appointment of Successor to Bank. The Holder shall have the right, upon thiiiy (30) days written notice to the Bank, to replace the Bank with a successor, which successor may be the Holder. Section 24. Location of Project. The Borrower represents that the Project is located entirely within the jurisdictional boundaries of the Issuer. (The remainder of this page is intentionally left blank.) 17 Agenda Page 92 IN WITNESS WHEREOF, the patties have caused this Agreement to be signed by their respective duly authorized representatives, as of the day and year first written above. STATE OF MINNESOTA COUNTY OF WRIGHT ) ) ss. ) CITY OF ALBERTVILLE, MINNESOTA Issuer () /L, By: /J \{rv'-- lts; Mayor On this \3 day of December, 2010, before me personally appearec!R= t(\-e_J(-{('personally known to me to be the person who executed this instrument as Mayor of the City of Albe1tville, Minnesota on behalf of the Issuer. (SEAL) STA TE OF MINNESOTA COUNTY OF WRIGHT ) ) ss. ) On this -13_ day of November, 20 I 0, before me persona~ap ea d Larry Kruse, personally known to me to be the person who executed this instrument tne c· Administrator o the City of Albertville, Minnesota on behalf of the Issuer. / / /, (SEAL) ~ (City signature page to Subordinate Regulat01y Agreement) S-1 Agenda Page 93 STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) U.S. HANK NATIONAL ASSOCIATION KIMBERLY K. GANLEY Nota,y P Jhlic Minr>+-?:-•, ;.:::;:.:.;;E><::;·•;.:~·~ _::: :.~.!- (Trustee signature page to Subordinate Regulatory Agreement) S-2 Agenda Page 94 STATE OF MINNESOTA ) ) ss, COUNTY OF HENNEPIN ) ALBERTVILLE LEASED HOUSING ASSOCIATES III, LP By: Albertville Leased Housing Associates III, LLC Its: General Pattner By: Its: Vice President On this 12_ day of December, 20 I 0, before me personally appeared Paul R. Sween, to me known to be the person who executed this instrument as the Vice President of Albe1tville Leased Housing Associates JII, LLC, the general patiner of Albe1tville Leased Housing Associates JII, LP, a Minnesota limited partnership on behalf of such limited pattners~hip., / / ERINM,McFARLAND ~~ Notary Public ~ Puhlic State of Minnesota Mt Commission Expires January 31, 2013 (Borrower signature page to Subordinate Regulatory Agreement) S-3 Agenda Page 95 EXHIBIT A Legal Description Parcel I: Lot 2, Block I, Westwind Third Addition Parcel 2: The benefit of the Cross Access Easement created in Easement Agreement dated October 3, 2008, filed October 8, 2008, as Document No. A I 099778, as amended by Corrective Amendment to Easement Agreement dated June 15, 2009, as Document No. A1120985 A-I Agenda Page 96 EXHIBITB Certification of Continuing Program Compliance Witnesseth that on this ____ day of ______ , __ , the undersigned ("Borrower"), having received the proceeds of the City of Albe1tville, Minnesota, $3,300,000 Subordinate Multifamily Housing Revenue Note (Albertville Meadows Apmtments Project), Series 20!0 for the purpose of the financing a multifamily housing development located in Albertville, Minnesota (the "Project"), does hereby certify that the Project is in continuing compliance with the Regulatory Agreement, dated as of December 21, 20 l 0, executed by the Borrower, with respect thereto and filed in the official public records of Wright County, Minnesota (including the requirement that all units be and remain rental units), that a Certification of Tenant Eligibility is attached hereto for each new tenant in such Project since the filing of the last such ce1tification and that the same are true and correct to the best of the Borrower's knowledge and belief. The Borrower ce1tifies that as of the date hereof at least 40% of the residential dwelling units in the Project are occupied or held open for occupancy by Lower Income Tenants, as defined and provided in the Regulatory Agreement. Albertville Leased Housing Associates III, LP By: Albertville Leased Housing Associates III, LLC Its: General Partner By: Its: B-1 Agenda Page 97 EXHIBITC Certification of Amendment or Termination or Deletion of Covenants WHEREAS, the City of Albe,tville, Minnesota (the "Issuer"), Albe1tville Leased Housing Associates III, LP (the "Borrower") and U.S. Bank National Association, a national banking association (the "Bank") have executed a ce1iain Regulatory Agreement, dated as of December 21, 2010 (the "Agreement") recorded on December_, 2010, in the office of the County Recorder for Wright County, Minnesota, as Document No. _____ ,, with respect to the following described land, to wit: Parcel I: Lot 2, Block I, Westwind Third Addition Parcel 2: The benefit of the Cross Access Easement created in Easement Agreement dated October 3, 2008, filed October 8, 2008, as Document No. A I 099778, as amended by Corrective Amendment to Easement Agreement dated June I 5, 2009, as Document No. A 1120985 WHEREAS, the Agreement contained ce1iain covenants and restrictions in Sections 2, 3 and 4 thereof which were intended to run with the land and be binding upon the Borrower, its successors and assigns; WHEREAS, the Issuer and the Trustee, their successors and assigns, were given in the Agreement the full and absolute right and obligation lo amend or terminate or delete such restrictions and to execute and deliver this Certificate for and on behalf of all persons and entities who might have been benefilted by such covenants and restrictions; and WHEREAS, under the terms and provisions of Section I 5 of the Agreement it is now an Appropriate Time (as such term is defined in the Agreement) to deliver this Ce1iificate and to amend or terminate or delete such covenants and restrictions; NOW, THEREFORE, This is to ce1iify that (DELETE (a) or (b) IF INAPPLICABLE]: (a) the covenants and restrictions set frnih in Sections 2, 3, 4 and 4A of the Agreement are null and void and of no further force or effect; the County Recorder in and for the County of Wright and State of Minnesota is hereby authorized to accept this instrument for recording as a conclusive determination of the termination and release of all covenants and restrictions set fo1ih in Sections 2, 3, 4 and 4A of the Agreement, as specified and as a complete termination of all rights and other remedial provisions of the Agreement or (b) the covenants and restrictions set forth in Section 2, 3, 4 and 4A ( or any of them, as specified: •• •••• •• •••••• • ••• ••••••••••••• • •••••••••••• • ••• ; ofilie Agi·een,ei,ta:i:e he.:efiy cfefe1ecrr.:om ilieAgiee,ne,11:, Ji,·ovictecliliat cfe~,.;~tI-an~····-·· ----- of such covenants and restrictions from the Regulatory Agreement shall not affect covenants and restrictions contained in any document or instrument delivered in connection with the issuance of the $3,300,000 Subordinate Multifamily Housing Revenue Note, (Albertville Meadows Apaiiments Project), Series 2010 issued by the Issuer, or the enforceability thereof against successors and assigns of the Borrower in accordance with the terms thereof; the County Recorder in and for the County of Wright and State of Minnesota is hereby authorized to accept this instrument for recording as a conclusive C-1 Agenda Page 98 , I determination of the deletion from the Agreement of all covenants and restrictions set fmth in Sections 2, 3, 4 and 4A (or any of them) as specified: Dated this __ day of ___ , 20 _. STA TE OF MINNESOTA COUNTY OF WRIGHT ) ) ss. ) CITY OF ALBERTVILLE, MINNESOTA By: Its: Mayor On this __ day of ____ , 20_, before me personally appeared ____ , personally known to me to be the person who executed this instrument as Mayor of the City of Albe1tville, Minnesota on behalf of the Issuer. STATE OF MINNESOTA COUNTY OF WRIGHT ) ) ss. ) Notary Public By: --c-~--c~~---------~ Its: City Adminisn·ator On this __ day of~---' 20_, before me personally appeared ______ , personally known to me to be the person who executed this instrument as the City Administrator of the City of Albe1tville, Minnesota on behalf of the Issuer. Notary Public C-2 Agenda Page 99 U.S. BANK NATIONAL ASSOCIATION By: Its: Vice President ST A TE OF MINNESOTA ) ) ss. COUNTY OF~--) On this~-day of _____ , 20_, before me personally appeared ______ , to me known to be the person who executed this instrument as ----~ of U.S. Bank National Association, a national banking association, on behalf of such national banking association. Notmy Public C-3 Agenda Page 100 EXHIBITD Income Computation and Certification Lower Income Tenants (to be revised per current regulations, as necessary) Project: Albe1iville Meadows Apa1iments Address: I 0740 County Road 37 Albertville, MN Borrower: Albertville Leased Housing Associates Ill, LP, a Minnesota limited partnership I. I/We, the undersigned, being first duly sworn, 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 apatiment development for which application is made, all of whom are listed below: I 2 3 4 5 Name of Members Social of the Relationship to Security Place of Household Head of Household Number Age Emplovment HEAD SPOUSE 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 prope1iy (without deducting expenditures for business expansion or amo1iization 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, workmen'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 15. exclud ,,1g casual, spoi'aclic 01'· ih'egillar gffls; airioii,ifa ,vh ich ai'e spect,caTly fa,: 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 prope1iy 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 such purposes; special pay to a D-1 Agenda Page 101 serviceman head of a family who is away from home and exposed to hostile fire; relocation payments under Title ll 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 paiticipation in ACTION volunteer programs, is as follows:$. _____ _ 3. If any of the persons described above ( or whose income or contributions was included in item 6) 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 item 6: $ 4. Students: a. Will all of the persons listed in column I 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 __ _ We acknowledge that all of the above information is relevant to the status under federal income tax law of the interest on the Note or other obligations issued to finance the apartment for which application is being made. We consent to the disclosme of such information to the issuer of such Note or other obligations, the holders of such Note or other obligations and any trustee acting on their behalf. 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 CANCELED UPON TEN (10) DAYS WRITTEN NOTICE IF ANY OF THE INFORMATION ABOVE IS NOT TRUE AND CORRECT. Tenant Subscribed and sworn to before me this day of _____ , __ . (Notary Seal) Nota1y Public in and for the State of __ _ My Commission Expires: D-2 Agenda Page 102 FOR COMPLETION BY BORROWER (OR ITS MANAGER) ONLY 5. Calculation of eligible tenant income: a. Enter amount entered for entire household in 6 above: b. If the amount entered in 7.a above is greater than $5,000, enter the greater of(i) the amount entered in 7.b less the amount entered in 7.c or (ii) I 0% of the amount entered in 7.a.: c. TOTAL ELIGIBLE INCOME (Line I.a plus line l.b): 6. 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 under the Regulatory Agreement ("Lower Income Tenant"). 7. Number of apartment unit assigned: ______ _ 8. 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 ce,tified 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. 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. ALl41-51 (llWJ) 376402v4 0-3 DO MINIUM MANAGEMENT SERVICES, LLC By: Its: _______________ _ Agenda Page 103 Mayor and Council Request for Action November 3, 2025 SUBJECT: PUBLIC HEARING – REQUEST FOR HOST APPROVAL OF HOUSING PROGRAM ON BEHALF OF GUARDIAN ANGELS OF ELK RIVER RECOMMENDATION: It is respectfully requested that the Mayor and Council consider the following: MOTION TO: Adopt Resolution No. 2025-43 giving approval to a proposed Housing Program and the issuance by the City of Becker, Minnesota of its Senior Living Revenue Notes (Engel Haus Expansion Project), Series 2025. BACKGROUND: The City of Albertville received a request from the Guardian Angels of Elk River, Inc. (the “Borrower”), that the City approve its intent to request the City of Becker, Minnesota to issue bonds under Minnesota Statutes, Chapters 462C and 462A and Section 471.656. A portion of the proceeds of the bonds will be used to finance eligible projects of the Borrower, including but not limited to the construction of an 86-unit independent living facility to be located at 5103 Kassel Ave. NE and the improvement of the adjacent existing 63-unit assisted living community located at 5101 Kassel Ave. NE in the City of Albertville. The Bonds are proposed to be issued by the Issuer in an estimated aggregate principal amount which is not expected to exceed $40,000,000. KEY ISSUES: • Guardian Angels of Elk River, Inc., requests that the City of Albertville approve a housing program which provides for the financing of the construction of an 86-unit independent living facility to be located at 5103 Kassel Ave. NE in the City, and the improvement of the adjacent existing 63-unit assisted living community located at 5101 Kassel Ave. NE. • There is no budget impact on the City of Albertville, and it does not present an obligation to the City since this is a host approval. • As required by the Housing Programs Act, the City is holding a public hearing. FINANCIAL CONSIDERATIONS: There is no budget associated with this request. These bonds are payable solely from revenues of the Borrower and do not present an obligation of the City. Since this is a host approval, the request does not have impact on the City’s bank qualification status. LEGAL CONSIDERATIONS: Section 147(f) of the Internal Revenue Code of 1986 and Minnesota Law require each municipality in which facilities to be financed by the bonds are located must approve the issuance of the bonds following a public hearing, basically granting host approval to the project. Responsible Person: Tina Lannes, Finance Director Submitted Through: Adam Nafstad, City Administrator-PWD Agenda Page 104 Mayor and Council Request for Action – November 3, 2025 Public Hearing – Host Approval for Housing Program Page 2 of 2 Attachments: • Dorsey Memorandum • Resolution No. 2025-43 Agenda Page 105 4915-3664-6517\6 MEMORANDUM – CITY OF ALBERTVILLE, MINNESOTA TO: The Honorable Mayor and Members of the City Council Tina Lannes, Finance Director FROM: Dorsey & Whitney, LLP DATE: November 3, 2025 RE: REQUEST FOR HOST APPROVAL OF PROPOSED HOUSING PROGRAM AND ISSUANCE OF BONDS BY CITY OF BECKER ON BEHALF OF GUARDIAN ANGELS OF ELK RIVER, INC., OR AN AFFILIATE THEREOF SUMMARY Guardian Angels of Elk River, Inc., or an affiliate thereof (the “Borrower”), asks that the City approve its intent to request the City of Becker, Minnesota (the “Issuer”) to issue bonds (the “Bonds”) under Minnesota Statutes, Chapters 462C and 462A, as amended, and Minnesota Statutes Sections 471.656, as amended. A portion of the proceeds of the Bonds will be used to finance eligible projects of the Borrower, including but not limited to the construction of an 86-unit independent living facility to be located at 5103 Kassel Ave. NE and the improvement of the adjacent existing 63-unit assisted living community located at 5101 Kassel Ave. NE in the City of Albertville (“the Project”). The Bonds are proposed to be issued by the Issuer in an estimated aggregate principal amount which is not expected to exceed $40,000,000. In addition to the facilities in the City, a portion of the proceeds of the Bonds will be used to refund the City of Otsego Refunding Revenue Bonds (Evans Park, Inc. Project), Series 2017A, which also financed or refinanced improvements to the Project. Section 147(f) of the Internal Revenue Code of 1986, as amended, and Minnesota law require that each municipality in which facilities to be financed by the Bonds are located must approve the issuance of the Bonds following a public hearing, essentially granting host approval to the project. REQUEST The Borrower requests that the City Council adopt the attached resolution approving a proposed housing program and the issuance of the Bonds by the Issuer for the purpose of financing and refinancing the Project. BUDGET IMPACT There is no budget impact associated with this request. These Bonds are payable solely from revenues of the Borrower and do not present an obligation of the City. Since this is a host approval, the request does not impact the City’s bank qualification status. Agenda Page 106 CERTIFICATE CITY OF ALBERTVILLE I, the undersigned being a duly qualified and acting officer of the City of Albertville, Minnesota, hereby attest and certify that: 1. As such officer, I have the legal custody of the original record from which the attached resolution was transcribed. 2. I have carefully compared the attached resolution with the original record of the meeting at which the resolution was acted upon. 3. I find the attached resolution to be a true, correct and complete copy of the original: RESOLUTION GIVING APPROVAL TO A PROPOSED HOUSING PROGRAM AND THE ISSUANCE BY THE CITY OF BECKER, MINNESOTA OF ITS SENIOR LIVING REVENUE NOTES (ENGEL HAUS EXPANSION PROJECT), SERIES 2025 4. I further certify that the affirmative vote on said resolution was ________ ayes, ________ nays, and _________ absent/abstention. 5. Said meeting was duly held, pursuant to call and notice thereof, as required by law, and a quorum was present. WITNESS my hand officially as such officer this 3rd day of November 2025. Kristine A. Luedke, City Clerk Agenda Page 107 CITY OF ALBERTVILLE COUNTY OF WRIGHT STATE OF MINNESOTA RESOLUTION NO. 2025-43 RESOLUTION GIVING APPROVAL TO A PROPOSED HOUSING PROGRAM AND THE ISSUANCE BY THE CITY OF BECKER, MINNESOTA OF ITS SENIOR LIVING REVENUE NOTES (ENGEL HAUS EXPANSION PROJECT), SERIES 2025 WHEREAS, by the provisions of Minnesota Statutes, Chapter 462C, as amended (the “Housing Programs Act”), the City of Albertville, Minnesota (the “City”), is authorized to adopt a program to finance multifamily housing developments within its boundaries; and WHEREAS, the City has received a request from Guardian Angels of Elk River, Inc., a Minnesota nonprofit corporation, on behalf of Engel Haus, LLC, a Minnesota limited liability company (the “Borrower”), the sole member of which is Evans Park, Inc., a Minnesota nonprofit corporation recognized as exempt as an organization described in Section 501(c)(3) of the Code, the sole member of which is Guardian Angels of Elk River, Inc., that the City approve a housing program presented to the City Council of the City (the “City Council”) in connection with a resolution adopted October 6, 2025 (the “Program”), which provides for the financing of (i) the construction of an 86-unit independent living facility (the “Independent Living Facility”) to be located at 5103 Kassel Ave. NE in the City, (ii) the improvement of the adjacent existing 63-unit assisted living community located at 5101 Kassel Ave. NE in the City (the “Assisted Living Facility”; together with the Independent Living Facility, the “Facilities”); (iii) the refunding of the City of Otsego Refunding Revenue Bonds (Evans Park, Inc. Project), Series 2017A, the proceeds of which were used to finance or refinance the Assisted Living Facility; and (iv) the payment of costs of issuing the Notes described herein (collectively the “Project”), all through the issuance by the City of Becker, Minnesota (the “Issuer”), of its revenue notes in one or more taxable and/or tax-exempt series, in a total principal amount not to exceed $40,000,000 (the “Notes”), issued as: Senior Living Revenue Note, Series 2025A (Engel Haus Expansion Project) and Senior Living Refunding Revenue Note, Series 2025B (Engel Haus Expansion Project), all as more particularly described in the Program; and WHEREAS, there being no regional development commission covering Wright County or Sherburne County, the Housing Program was not required to be submitted to a regional development commission for comment; and WHEREAS, proceeds of the Notes will be loaned to the Borrower to finance the Project; NOW, THEREFORE, be it resolved by the City Council of the City of Albertville, Minnesota, that: 1. As required by the Housing Programs Act, the City Council held a public hearing on the date hereof on the adoption of the Program and issuance of the Notes by the Issuer, all after publication in the official newspaper of general circulation of a notice setting forth, among other things, the time and place of hearing; stating the general nature of the Program and an estimate of the principal amount of the Notes or other obligations to be issued to finance the Agenda Page 108 City of Albertville Resolution No. 2025-43 Meeting of November 3, 2025 Page 2 Project; and stating that all parties who appear at the public hearing shall have an opportunity to express their views with respect to the proposal. 2. The Borrower will be required to pay all the expenses of the City paid or incurred with respect to the Program or the Notes and to indemnify the City for any potential liability incurred by the City with respect to the Program or the Notes. 3. The Program and the issuance of the Notes by the Issuer to finance the Project, are hereby approved, subject only to final approval and authorization by the Issuer of the Notes, and agreement by the Issuer, Borrower and the purchaser of the Notes, as to the details of the Notes and provisions for their payment. References in the Housing Program to Bonds shall be to the Notes. 4. In no event shall the Notes ever be payable from or charged upon any funds of the City ; no holder of the Notes shall ever have the right to compel the exercise of the taxing power of the City to pay the Notes or the interest thereon, nor enforce the payment thereof against any property of the City; the Notes shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City; and the Notes do not constitute an indebtedness of the City within the meaning of any constitutional, statutory, or charter limitation. 5. The Borrower is hereby authorized to enter into such contracts, in its own name and not as agent for the City, as may be necessary for the Program by any means available to it and in the manner it determines, without advertisement for bids as may be required for the acquisition or construction of municipal facilities, but the City shall not be liable on any such contracts. 6. The City hereby approves the Program and approves, and thereby provides host approval to, the issuance of the Notes by the Issuer, for purposes of Minnesota Statutes, Section 471.656, and in accordance with section 147(f) of the Internal Revenue Code of 1986, as amended, and regulations thereunder. Adopted by the City Council of the City of Albertville this 3rd day of November 2025. ____________________________________ Jillian Hendrickson, Mayor ATEST: __________________________ Kristine A. Luedke, City Clerk Agenda Page 109 Mayor and Council Request for Action November 3, 2025 SUBJECT: PLANNING – APPROVE BNSF MINOR SUBDIVISION RECOMMENDATION: It is respectfully requested that the Mayor and Council consider the following for Dave Jurek of Bogart-Pederson and Associates Inc., the applicant, on behalf of the property owner, BNSF Railway Company for PID 101-999-444100: •Minor Subdivision MOTION TO: Adopt Resolution No. 2025-45 approving the minor subdivision of PID 101- 999-444100 with conditions. BACKGROUND: The application proposes to subdivide approximately 13,343 sq. ft. from an existing railroad parcel. Staff is aware that the intent of the subdivision is to separate the land in question and sell the land to Federated Co-op, who currently occupies the land and owns two of the adjacent parcels. The Planning Commission reviewed the minor subdivision and held a public hearing on at their October 14, 2025, meeting. One comment was received that asked about potential improvements or further development of the site. Staff noted that the current application was only for the subdivision and that staff was unaware of any future development proposed for the site. The Planning Commission discussed access to the site, potential future applications from Federated Co-op, and future compliance with dimensional standards. The Planning Commission recommends approval of the applications citing consistency with the City’s Comprehensive Plan, zoning codes, and economic development goals. KEY ISSUES: •The minor subdivision will separate 13,343 sq. ft. from an approximately 34.08 acre parcel that is zoned Right-of-Way. •There are no particular dimensional standards (lot width, lot area) for lots zoned Right- of-Way. •The survey does not depict any easement proposed to be created. •The parcel to be created will retain its current access across the railroad tracks to the north through an existing private access agreement with BNSF that provides access to Federated Coop. •The minor subdivision was recommended for approval by staff and the Planning Commission with two conditions. •Upon approval of this minor subdivision, the applicant will plat all of their parcels into one parcel. (The application has been submitted but is incomplete pending their ownership of said parcel). POLICY/PRACTICES CONSIDERATIONS: Approval of the minor subdivision are consistent with the City’s long range land use plan, subdivision ordinance, and zoning code. Agenda Page 110 Mayor and Council Request for Action – November 3, 2025 Planning – BNSF Minor Subdivision Page 2 of 2 FINANCIAL CONSIDERATIONS: Park dedication is required with the final plat. Commercial subdivision or developments require 10% land dedication. 10% of the subdivided area is 0.306 acres or 13,343 sq. ft. Cash in lieu of land dedication is determined by the City of Albertville fee schedule. Cash in lieu of land for industrial properties is $9,020.00 per acre subdivided. Cash in lieu of land for this site is $2,760.12. LEGAL CONSIDERATIONS: The City Attorney has not provided any legal considerations for this application. Responsible Person: Jenni Faulkner, Bolton & Menk T.J. Hofer, Bolton & Menk Submitted Through: Adam Nafstad, City Administrator-PWD Attachments: • Resolution No. 2025-45 approving a Minor Subdivision • PC Memo with Attachments Agenda Page 111 CITY OF ALBERTVILLE COUNTY OF WRIGHT STATE OF MINNESOTA RESOLUTION NO. 2025-45 RESOLUTION APPROVING A MINOR SUBDIVISION WHEREAS, Dave Jurek of Bogart-Pederson and Associates Inc. has made an application on behalf of the property owner, BNSF Railway Company for a Minor Subdivision for railroad property; and WHEREAS, the land to be subdivided lies within PID 101-999-444100 and is described as being located within the Northeast Quarter of the Northwest Quarter of Section 1, Township 120, Range 24, Albertville, Wright County, MN; being a portion of the same property described in Warranty Deed filed in 1882 in Book 5 pages 621 and 622; and WHEREAS, the full legal description and survey for the parcel to be created is attached as Exhibit A and consists of approximately 13,343 sq. feet; and WHERAS, the parcel is owned by BNSF Railway Company and is being occupied by Federated Coop; and WHEREAS, BNSF Railway Company intends to convey the parcel to Federated Coop; and WHEREAS, the dividing of unplatted land within the City of Albertville requires the approval of the City; and WHEREAS, the proposed Minor Subdivision is designated as Right-Of-Way on the Zoning Map; and WHEREAS, there are no lot standards in the Zoning Ordinance for Right-Of-Way; and WHEREAS, the City of Albertville Planning Commission conducted a public hearing on October 14, 2025, to consider the Minor Subdivision; and WHEREAS, notice of the public hearing on said Minor Subdivision was duly published and mailed in accordance with the applicable Albertville Ordinances; and WHEREAS, the Planning Commission heard all persons interested in the Minor Subdivision at the public hearing, and the Commission recommended approval of the request to the City Council; and WHEREAS, the City Council finds that the proposed Minor Subdivision for BNSF Railway Company meets the requirements of the Subdivision Ordinance. Agenda Page 112 City of Albertville Resolution No. 2025-45 Meeting of November 3, 2025 Page 2 NOW, THEREFORE, BE IT RESOLVED, that the City Council of Albertville, Wright County, Minnesota, hereby approves the Minor Subdivision for BNSF Railway Company subject to the following conditions: 1. Federated Coop shall submit a complete application for preliminary plat of all commonly owned contiguous parcels and lots owned by Federated Coop that exist or are created with this approval prior to releasing documents for recording and conveyance. 2. Park dedication shall be paid prior to releasing documents for recording and conveyance. 3. The application for preliminary plat shall also include application to rezone said new parcel being created from Right-of-Way to Federated Coop PUD (B-3). Adopted by the City Council of the City of Albertville this 3rd day of November, 2025. ___________________________ Jillian Hendrickson, Mayor ATTEST: _____________________________ Kristine A. Luedke, City Clerk Agenda Page 113 City of Albertville Resolution No. 2025-45 Meeting of November 3, 2025 Page 3 EXHIBIT A Agenda Page 114 Planning Commission Request for Recommendation October 14, 2025 ACTION REQUESTED The Planning Commission is asked to conduct a public hearing and make a recommendation to the City Council on the Minor Subdivision. BACKGROUND Dave Jurek of Bogart-Pederson and Associates Inc., the applicant, has made an application on behalf of the property owner, BNSF Railway Company for a Minor Subdivision. The minor subdivision will create a parcel to be added to an existing adjacent parcel owned and occupied by Federated Coop. The minor subdivision is effectively a lot line adjustment that will result in land occupied by Federated Coop, being incorporated into their ownership and legal description. Federated Coop has stated that they wish to combine the existing and resulting parcels under their ownership which will require a preliminary plat. The property is located between city ballfields within Central Park and the railroad tracks (west of Main Ave. and east of Lachmann Ave), south of 60th St NE. The site is part of railroad property and is abutting Federated Coop parcels to the east and west. The parcel to be split from the railroad parcel is approximately 13,343 sq. feet. The parcel is zoned Right-of-Way. TO: Chair Buhrmann and Members of the Planning Commission FROM: Jenni Faulkner, Consultant Planner TJ Hofer, Consultant Planner AGENDA ITEM: Minor Subdivision for BNSF Railway Company for PID 101- 999-444100. HEARINGS Minor Subdivision for railroad property within PID 101-999- 444100 and described as being located within the Northeast Quarter of the Northwest Quarter of Section 1, Township 120, Range 24, Albertville, Wright County, MN; being a portion of the same property described in Warranty Deed filed in 1882 in Book 5 pages 621 and 622. Agenda Page 115 Planning Commission Request for Recommendation – October 14, 2025 Planning – BNSF Minor Subdivision Page 2 of 3 The site is currently used for part of a drive aisle, yard, and outdoor storage for Federated Coop. The use is non-conforming. Splitting this lot from the larger railroad right-of-way parcel will allow it to be combined with adjacent Federated Coop parcels in an effort to bring their site into conformance and consolidate/clarify their ownership in their parcels. Attached is a draft of the preliminary plat that will be forthcoming after this Minor Subdivision is approved. REVIEW Minor Subdivision Review Minor subdivision are allowed when: In the case of a request to divide a portion of a lot where the division is to permit the adding of a parcel of land to an abutting lot so that no additional lots are created and both new lots conform to zoning ordinance lot size minimum standards. In the case of a request to divide a lot from a larger tract of land and thereby creating no more than two (2) lots. To qualify, the parcel of land shall not have been part of a subdivision within the last five (5) years. As the property has not been previously platted, and is less than 10 acres in total area, the process for processing this minor subdivision follows that of a preliminary plat. Dimensional Standards There are no particular dimensional standards (lot width, lot area) for lots zoned Right-of-Way. A condition requiring the applicant to rezone the parcel to “Federated PUD (B-3)” at the time of platting the entire Federated Coop properties is recommended. Easements The survey does not depict any easement proposed to be created. Drainage and utility easement will be required when the parcel is platted with adjacent Federate Coop parcels. Access The parcel to be created will retain its current access. There is a private access agreement with BNSF that provides access to Federated Coop across the railroad tracks to the north. RECOMMENDATION: It is respectfully requested that Chair Buhrmann and Members of the Planning Commission consider the following: MOTION TO: Recommend approval of the application for a Minor Subdivision for railroad property within PID 101-999-444100 and described as being located within the Northeast Quarter of the Northwest Quarter of Section 1, Township 120, Range 24, Albertville, Wright County, MN; being a portion of the same property described in Warranty Deed filed in 1882 in Book 5 pages 621 and 622 with the following conditions of approval: Agenda Page 116 Planning Commission Request for Recommendation – October 14, 2025 Planning – BNSF Minor Subdivision Page 3 of 3 1. Federated Coop shall submit a complete application for preliminary plat of all commonly owned contiguous parcels and lots owned by Federated Coop that exist or are created with this approval prior to releasing documents for recording and conveyance. 2. The application for preliminary plat shall also include application to rezone said new parcel being created from Right-of-Way to Federated Coop PUD (B-3). Attachments: • Location Map • Certificate of Survey (Minor Subdivision) • Draft Preliminary Plat • Draft Resolution Agenda Page 117 SITE Agenda Page 118 Agenda Page 119 Agenda Page 120 CITY OF ALBERTVILLE COUNTY OF WRIGHT STATE OF MINNESOTA RESOLUTION NO. 2025-XX RESOLUTION APPROVING A MINOR SUBDIVISION WHEREAS, Dave Jurek of Bogart-Pederson and Associates Inc. has made an application on behalf of the property owner, BNSF Railway Company for a Minor Subdivision for railroad property; and WHEREAS, the land to be subdivided lies within PID 101-999-444100 and is described as being located within the Northeast Quarter of the Northwest Quarter of Section 1, Township 120, Range 24, Albertville, Wright County, MN; being a portion of the same property described in Warranty Deed filed in 1882 in Book 5 pages 621 and 622; and WHEREAS, the full legal description and survey for the parcel to be created is attached as Exhibit A and consists of approximately 13,343 sq. feet; and WHERAS, the parcel is owned by BNSF Railway Company and is being occupied by Federated Coop; and WHEREAS, BNSF Railway Company intends to convey the parcel to Federated Coop; and WHEREAS, the dividing of unplatted land within the City of Albertville requires the approval of the city; and WHEREAS, the proposed Minor Subdivision is designated as Right-Of-Way on the Zoning Map; and WHEREAS, there are no lot standards in the Zoning Ordinance for Right-Of-Way; and WHEREAS, the City of Albertville Planning Commission conducted a public hearing on October 14, 2025, to consider the Minor Subdivision; and WHEREAS, notice of the public hearing on said Minor Subdivision was duly published and mailed in accordance with the applicable Albertville Ordinances; and WHEREAS, the Planning Commission heard all persons interested in the Minor Subdivision at the public hearing, and the Commission recommended approval of the request to the City Council; and WHEREAS, the City Council finds that the proposed Minor Subdivision for BNSF Railway Company meets the requirements of the Subdivision Ordinance; and Agenda Page 121 City of Albertville Resolution No. 2025-XX Meeting of November 3, 2025 Page 2 NOW, THEREFORE, BE IT RESOLVED, that the City Council of Albertville, Wright County, Minnesota, hereby approves the Minor Subdivision for BNSF Railway Company subject to the following conditions: 1. Federated Coop shall submit a complete application for preliminary plat of all commonly owned contiguous parcels and lots owned by Federated Coop that exist or are created with this approval prior to releasing documents for recording and conveyance. 2. The application for preliminary plat shall also include application to rezone said new parcel being created from Right-of-Way to Federated Coop PUD (B-3). Adopted by the City Council of the City of Albertville this 3rd day of November, 2025. ___________________________ Jillian Hendrickson, Mayor ATTEST: _____________________________ Kristine A. Luedke, City Clerk Agenda Page 122 City Administrator’s Update October 30, 2025 GENERAL ADMINISTRATION Absentee Voting for STMA Levy Election: Absentee voting for the November Election continues through Monday, November 3. Residents can absentee vote at the STMA District Office. STMA Levy Voting on Election Day: On November 4, the polling location for the STMA Levy Election is the STMA Middle School West, 11343 50th Street NE. The polls will be open from 7 am to 8 pm. Planning Commission Vacancy: A Special Council Workshop was held on October 20 prior to the Council meetings for the first of two Planning Commissioner interviews. The second interview is scheduled for 6:45 pm prior to the November 3 Council meeting. Veterans Day: A reminder that City Offices are closed on Tuesday, November 11 in observance of Veterans Day. Truth-in Taxation: The City’s Truth-in Taxation hearing is scheduled for 6:15 pm on Monday, December 1, 2025, prior to the regular Council meeting. Subordination Agreements: Included on the consent agenda is a resolution approving and authorizing the execution of two subordination agreements. In December of 2010, the City issued bonds on behalf of Albertville Leased Housing Associates III, LP (the “Borrower”) who used the proceeds of the Bonds to finance the construction of the Albertville Meadows apartments. Minnesota law requires that for these kinds of housing bonds, a regulatory agreement be entered into by the City, the Borrower, and the Trustee for the bonds. The agreement is recorded against the facility and establishes a minimum time period that the facility must meet certain affordability requirements. The City entered into two regulatory agreements related to this financing, one for senior bonds and one for subordinate bonds. The Borrower is seeking a loan from Colliers Mortgage (which will be assigned to Fannie Mae) and the Borrower will use the proceeds of this loan to pay off the outstanding bonds. Even though the bonds will be paid off, the term of the regulatory agreement runs until December 20, 2025. Fannie Mae requires that the City subordinate its interest in the regulatory agreement to Fannie Mae. Because this is a conduit financing and the Bonds are paid off, there is no risk to the City for the City to subordinate its interest under the Regulatory Agreement. The City’s Bond Counsel, Taft, has reviewed the agreements. Custodian/Building Maintenance Positions: Staff is working to fill this position. Code/Zoning Enforcement: The City is working on several properties regarding zoning ordinance and/or nuisance ordinance violations. Generally, the violations include outdoor storage of vehicles, materials, and/or equipment, and typically include junk accumulation and illegal structures. Agenda Page 123 City Administrator’s Update Page 2 of 2 October 30, 2025 ENGINEERING/PUBLIC WORKS Main Avenue Reconstruction: This week the curbing and light bases between 58th Street and 57th Street were installed. Also underway are the seat walls next to the pavilion and the seat wall along the Parish Center parking lot. Next week the Contractor will be completing the concrete parking lot and most of the concrete walkways. The first lift of pavement will be placed and boulevard and restoration work will begin. Central Park Playground and Plaza: The playground equipment and the rubberized surfacing is complete and the landscaping around the play area is underway. Next week the Contractor will be focused on the Plaza entrance wall and splash pad piping. CSAH 18 (Main Ave to CSAH 19): The County is working to complete the traffic study associated with the proposed concept and will be developing construction plans for a potential spring construction start. CSAH 137: The project is underway and the primary focus in 2025 will be the roundabout at Mackenzie. Generator Improvements: Work is ongoing at both the Fire Hall and Villa’s lift station and we expect both locations to be completed this fall. Agenda Page 124