HomeMy WebLinkAbout5L Assign TIF to Creekside 7K, LLC O � PRI��
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CITY COUNCIL AGENDA REPORT
MEETING DATE: NOVEMBER 12, 2012
AGENDA #: 5L
PREPARED BY: DAN ROGNESS, COMMUNITY & ECONOMIC DEVELOPMENT DIRECTOR
PRESENTED BY: DAN ROGNESS
AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION ASSIGNING DEVELOPMENT
AGREEMENT AND TAX INCREMENT REVENUE NOTE FROM CREEKSIDE
54, LLC TO CREEKSIDE 7K, LLC
DISCUSSION: Introduction ,
The purpose of this agenda item is to consider assigning an existing development '
agreement and corresponding TIF Note related to Creekside Commons Apart- ��
ments located at 16535 Tranquility Court SE. The assignment request is antici- i
pated in Section 10 of a City Estoppel Memorandum (Attachment 1).
Histo
The City of Prior Lake entered into a Development Agreement with Eagle Creek
Development, LLC on March 6, 2002 (Exhibit A of Attachment 1). This agreement
specifies conditions under which tax increment financing (TIF) was provided to
assist with the financing of affordable senior housing units. At least 20% of the
rental units must be leased to senior households with incomes at/below 50% of
the area median income limit established by HUD. The project was satisfactorily
completed, and the primary ongoing compliance requirement relates to the
owner's certification of those affordable units two times per year. In late 2011, the
project owners refinanced existing debt with another lender, Aetna Life Insurance
Company. Aetna required that they refinance using a new single business entity,
which resulted in the formation of Creekside 54, LLC (a state certificate was filed
on 9/19/11).
I
Current Circumstances
On October 16, 2013, Aetna Life Insurance Company provided a letter evidencing
its commitment to the sale and conveyance of the property to a single purpose
entity, Creekside 7K, LLC. A summary of each is as follows:
1. Creekside 54, LLC — Members include Central Development Corp. of
America, Inc. (50%), Mesenbrink Construction & Engineering, Inc. (27%),
and John & Mary Mesenbrink (23%); officers include Larry Gensmer as
Chief Manager, John Mesenbrink as Secretary, and Brad Rothnem as
Treasurer.
2. Creekside 7K, LLC — Members include Barry Klos, Daniel Klos, David
Klos, Joseph Klos, John Klos, Steve Klos, Kim Poncius, and a Trustee of
the Daniel L. Klos Supplemental Needs Trust (David & Lucy Klos), with
one-seventh interest each; officers include Steve Klos as Chief Manager,
Joseph Klos as Treasurer, and David Klos as Secretary.
Staff requested information about the financial condition of the new LLC members,
resulting in a statement of combined net worth of $17.5 million. In addition, mem-
bers are part of nine other multi-family development ownerships in the Twin Cities
consisting of a total of 228 rental units.
Conclusion ,
The City Council needs to be assured that the obligations of the current Developer I
be equally satisfied by the assignee, Creekside 7K, LLC. The primary ongoing
obligation requires a certification for the 20% set-aside affordable units two times
each year through 2022. To date, the owners have complied with this require-
ment, as further evidenced by an independent audit report on 12/27/12 by Afford-
able Housing Connections. The independent audit obligation will continue to the
new owners, as may be required by the City of Prior Lake from time to time to
satisfy the minimum TIF housing requirements.
ISSUES: This is the second time in the life of this Tax Increment Agreement that assignment
has been requested.
There is no history as to the business entity recently certified by the state as
Creekside 7K, LLC. However, the City must rely upon the language of the devel-
opment agreement, the due diligence of Aetna Life Insurance, and the structure
of Creekside 7K, LLC to continue compliance of the development obligations
through 2022.
FINANCIAL IM- None. Upon approval, the city council will authorize all future TIF Note payments
PACT: to Creekside 7K, LLC.
ALTERNATIVES: 1. Motion and second to approve a resolution assigning the existing Develop-
ment Agreement and TIF Note from Creekside 54, LLC to Creekside 7K,
LLC, and authorize future TIF Note payments to Creekside 7K, LLC.
2. Do not approve the resolution for the assignment. '
3. Table the resolution and request additional information.
RECOMMENDED Approve Alternative #1.
MOTION:
ATTACHMENTS:
1. Estoppel Memorandum
2. Consent Agreement
3. Operating Agreement of Creekside 7K, LLC
4. TIF Development Agreement
5. TIF Note
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4646 Dakota Street SE
'�r�so��' Prior Lake, N1N 55372
RESOLUTION 13-xxx
A RESOLUTION ASSIGNING A DEVELOPMENT AGREEMENT AND TAX INCREMENT REVENUE
NOTE FROM CREEKSIDE 54, LLC TO CREEKSIDE 7K, LLC
Motion By: Second By:
WHEREAS, A City Estoppel Memorandum was completed on November 5, 2013 regarding the
proposed assignment of interest in property located at 16535 Tranquility Court SE,
known as Creekside Commons Apartments, from Creekside 54, LLC to Creekside 7K,
LLC; and
WHEREAS, Section 10 of the City Estoppel Memorandum allows the assignment of the TIF
Development Agreement andlor the TIF Note by consent of the Prior Lake City Council;
and
WHEREAS, Based on information submitted from Creekside 7K, LLC and Aetna Life Insurance
Company, the City Council is in agreement that the assignment from Creekside 54, LLC
to Creekside 7K, LLC will continue ongoing compliance requirements of the existing
Development Agreement dated March 6, 2002; and
WHEREAS, Creekside 7K, LLC was issued a certificate on 11/04/13 by the Minnesota Secretary of �
State following Minnesota Chapter 3226 for a Limited Liability Company, File Number
693303400023.
NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE,
MINNESOTA as follows:
1. The recitals set forth above are incorporated herein.
2. The assignment of the Development Agreement datetl March 6, 2002 and the TIF Note issued on
November 17, 2003 is hereby approved from Creekside 54, LLC to Creekside 7K, LLC.
PASSED AND ADOPTED THIS 12th DAY OF NOVEMBER, 2013.
YES NO
Hedber Hedber
Keene Keene
Souku Souku
Morton Morton
McGuire McGuire
Frank Boyles, City Manager
CITY ESTOPPEL MEMORANDUM
Dated: November 6, 2013
To: Aetna Life Insurance Company and its affiliates, successors and
assigns ("Mortgagee")
151 Farmington Avenue RTAA
Hartford, Connecticut 06156
From: The City of Prior Lake
4646 Dakota Street SE
Prior Lake, MN 55372 (the "City")
Development
Property: Creekside Commons Apartments, located at 16535 Tranquility Court
SE, City of Prior Lake, County of Scott and State of Minnesota and
referred to as the "Project" in the TIF Agreement (as hereinafter defined)
(the "Development Property")
The purpose of this memorandum is to acknowledge and certify certain facts in connection with
the Development Property.
1. The present owner of the Development Property, Creekside 54, LLC (the
"Developer"), seeks to assign its interest, rights and obligations in and to the Property to Creekside
7K, LLC (the "Assignee"). Assignee is seeking a loan from Mortgagee. The City of Prior Lake
acknowledges that the Developer, Assignee and Mortgagee will rely on the representations and
agreements made by the City herein and that they are so entitled to rely on these representations.
2. City is the "City" under that certain Development Agreement ("TIF Agreement")
by and between The City of Prior Lake and Creekside 54, LLC, as assigned (the "Developer")
dated as of March 6, 2002. All capitalized terms not otherwise defined herein shall have the
meanings provided in the TIF Agreement.
3. The TIF Agreement has not been modified, supplemented or amended in any
respect. There are no other agreements or understandings, whether written or oral, between the
City, and either the Developer or Assignee with respect to the TIF Agreement or the Development
Property. The TIF Agreement is valid and in full force and effect on the date hereof. No Event of
Default or state of facts which would, but for the lapse of time, constitute an Event of Default of
the Developer, exists under the TIF Agreement.
4. A true, correct and complete copy of the TIF Agreement, with all exhibits thereto,
is attached hereto as Exhibit A .
5. The term of the TIF Agreement commenced on March 6, 2002, and shall terminate
on February 1, 2024.
6. In connection with the TIF Agreement, the City executed and delivered to
Developer a Tax Increment Revenue Note dated as of November 17, 2003, in the principal amount
of $516,246 ("TIF Note").
7. A true, correct and complete copy of the TIF Note, with all exhibits thereto, is
attached hereto as Exhibit B .
8. As of the date hereof, $557,737.86 has been paid by the City to Developer pursuant
to the TIF Note. As of the date hereof, the outstanding principal balance of the TIF Note, subject
to all conditions of that Note, is $352,828.39, and Exhibit C sets forth the schedule of debt service
payments scheduled to be made with respect to the TIF Note in order for City to satisfy all of its
payment obligations, subject to all conditions thereunder. The last payment made by the City to
Developer was on August 1, 2013.
9. City represents and warrants that Developer has complied with all obligations
required to be performed by Developer as of the date hereof under the TIF Agreement or otherwise,
including, without limitation, those obligations relating to construction and operation of the
Development Property.
10. Developer may not assign the TIF Agreement or the TIF Note without prior written
consent of the City, which consent must be approved by the Prior Lake City Council (the
"Council"). The City understands that Developer and Assignee intend to seek the Council's
approval of Developer's plan to assign to Assignee the Developer's interest, rights and obligations
in and to the Property.
11. Mortgagee intends to make a loan to Assignee, which will be secured by a mortgage
encumbering the Development Property. City agrees that, so long as Mortgagee's mortgage on
the Development Property remains of record, the City shall, upon serving Developer or the
Assignee with any notice given pursuant to the TIF Agreement, send a copy thereof to Mortgagee
at:
Aetna Life Insurance Company
151 Farmington Avenue RTAA
Hartford, Connecticut 06156
Attn. Fernando Treviso
12. This Estoppel Memorandum is delivered to Mortgagee with the understanding that
Mortgagee shall rely upon the truth of the matters set forth in this Estoppel in making the Loan,
and that this Estoppel shall be for the benefit of Mortgagee or the holder of any loan made granted
to replace, refinance, or be in substitution of the mortgage loan.
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A/745139662
CITY OF PRIOR LAKE
By:
Name: Frank Boyles
Title: City Manager
3
A/745139662
Exhibit A
[Copy of TIF Agreement]
Exhibit A-1
A/74513966.2
Exhibit B
[Copy of TIF Note]
Exhibit B-1
A/745139662
Exhibit C
[Scheduled Debt Service Payments for TIF Note]
Exhibit C-1
A/745139662
CONSENT AGREEMENT FOR THE ASSIGNMENT OF THE DEVELOPMENT
AGREEMENT AND TAX INCREMENT FINANCING REVENUE NOTE FOR THE
PROJECT KNOWN AS CREEKSIDE COMMONS APARTMENTS
WHEREAS, Creekside 54, LLC ("Assigned Owners") are the owners of Creekside Commons
Apartments located at 16535 Tranquility Court, Prior Lake, Minnesota 55372 ("Project"); and
WHEREAS, The Project was funded in part by Tax Increment Financing authorized by the City of
Prior, Minnesota ("City") and is subject to a Development Agreement dated March 6, 2002
("Development Agreement")and corresponding Tax Increment Revenue Note ("Note") collectively
referred to as "Development Agreement and Note"); and
WHEREAS, The Assigned Owners desire to sell the Project and assign the Development Agreement
and their interests in the Note to Creekside 7K, LLC; and
WHEREAS, Creekside 7K, LLC is owned by Steven E. Klos, Joseph M. Klos, David J. Klos, John F. Klos,
Barry J. Klos, Kim Poncius, and David and Lucy Klos as Trustee of the Daniel K. Klos Supplemental
Needs Trust ("New Owners") and is subject to a mortgage issued by Aetna Life Insurance
Company; and
WHEREAS, The Original Owners require the consent of the Prior Lake City Council in order to
assign the Development Agreement and Note to the New Owners.
NOW THEREFORE the parties agree as follows:
1. The Recitals set forth above are incorporated herein as if fully set out.
2. The City Council consents to the assignment of the Development Agreement and Note for
the Project subject to the provisions below.
3. The Original Owners acknowledge that as of the date of the assignment, they have no
rights or claim to tax increment financing ("TIF") payments as provide for in the Development
Agreement and Note.
4. The Prior Lake City Council consents to the assignment of the Development Agreement and
Note for the Project from the Assigned Owners to the New Owners.
5. The New Owners consent to and accept to the assignment of the Development Agreement
and Note and further agree to be bound by all the terms and conditions set forth in said
Development Agreement and Note.
6. The New Owners consent and agree to assume the responsibility for and agree to be
bound by all previous acts of the Assigned Owners as they relate to compliance with the terms and
conditions of the Development Agreement; including the provisions in Section 4.6 regarding the
responsibility to indemnify and hold the City harmless as provided for in said Section 4.6 of the
Development Agreement.
7. The New Owners agree that from time to time, at such periods and intervals as in its sole
discretion the City finds appropriate, the City may provide for an independent audit of the
certifications set out in Section 3.3 of the Development Agreement regarding the number of units
occupied by persons meeting the income and gross rent requirements. The New Owners will be
responsible for the cost of any such audit; except that the New Owners may not be required to pay
for more than two (2) audits in any twenty-four (24) month period.
8. The Assigned Owners release and waive, now and forever, any and all claims that may now
exist, know or unknown, or that may arise in the future relating to the Development Agreement
and Note.
Assigned Owners:
Larry Gensmer, Chief Manager Date
Brad Rothnem, Treasurer Date
John Mesenbrink, Secretary Date
STATE OF MINNESOTA )
) ss
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this day of November,
2013, by Larry Gensmer, Chief Manager, Brad Rothnem, Treasurer, and John Mesenbrink, Secretary,
of Creekside 54, LLC.
Notary Public
This is a signature page to the Consent Agreement for the Assignment of the Development
Agreement and Tax Increment Financing Revenue Note for the Project known as Creekside
Commons Apartments.
New Owners:
Steve Klos, Chief Manager Date
Joseph Klos, Treasurer Date
David Klos, Secretary Date
STATE OF MINNESOTA )
) ss
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this day of November,
2013, by Steve Klos, Chief Manager, Joseph Klos, Treasurer, and David Klos, Secretary, of Creekside
7K, LLC.
Notary Public
This is a signature page to the Consent Agreement for the Assignment of the Development
Agreement and Tax Increment Financing Revenue Note for the Project known as Creekside
Commons Apartments.
City:
Kenneth L. Hedberg, Mayor Date
Frank Boyles, Manager Date
STATE OF MINNESOTA )
) ss
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this day of November, I
2013, by Kenneth L. Hedberg, the Mayor and Frank Boyles, the Manager of the City of Prior Lake on
behalf of said City.
Notary Public
This is a signature page to the Consent Agreement for the Assignment of the Development
Agreement and Tax Increment Financing Revenue Note for the Project known as Creekside
Commons Apartments.
OPERATING AGREEMENT
OF
CREEKSIDE 7K, LLC
Section 1.01. Place of Meetin�s. Each meeting of the members shall be held at the
principal executive office of the Company or at such other place as may be designated by the Board of
Governors or the Chief Manager; provided, however, that any meeting called by or at the demand of a
member or members shall be held in the county where the principal executive office of the Company is
located.
Section 1.02. Regular Meetings. Regular meetings of the members may be held on an annual
or other less frequent basis as determined by the Board of Governors; provided; however, that if a
regular meeting has not been held during the immediately preceding 15 months, a member or members
owing three percent or more of the voting power of all membership interests entitled to vote may
demand a regular meeting of inembers by written demand given to the Chief Manager or Treasurer of
the Company. At each regular meeting the members entitled to vote shall elect qualified successors for
governors who serve for an indefinite term or whose terms have expired or are due to expire within six
months after the date of the meeting and may transact any other business, provided, however, that no
business with respect to which special notice is required by law shall be transacted unless such notice
shall have been given.
Section 1.03. Special Meetin�s. A special meeting of the members may be called for any
purpose or purposes at any time by the Chief Manager; by the Treasurer; by the Board of Governors or
any two or more governors; or by one of more members owning not less than ten percent of the voting
power of all membership interests of the Company entitled to vote, who shall demand such special
meeting by written notice given to the Chief Manager or the Treasurer of the Company specifying the
purposes of such meeting.
Section 1.04. Meetings Held U,pon Member Demand. Within 30 days after receipt of a
demand by the Chief Manager or the Treasurer from any member or members entitled to call a meeting
of the members, it shall be the duty of the Board of Governors of the Company to cause a special or
regular meeting of inembers, as the case may be, to be duly called and held on notice no later than 90
days after receipt of such demand. If the Board fails to cause such a meeting to be called and held as
required by this Section, the member or members making the demand may call the meeting by giving
notice as provided in Section 1.06 hereof at the expense of the Company.
Section 1.05. Adjournments. Any meeting of the members may be adjourned from time to
time to another date, time and place. If any meeting of the members is so adjourned, no notice as to
such adjourned meeting need to be given if the date, time and place at which the meeting will be
reconvened are announced at the time of adjournment.
Section 1.06. Notice of Meetin�s. Unless otherwise required by law, written notice of each
meeting of the members, stating the date, time and place and, in the case of a special meeting, the
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purpose of purposes, shall be given at least ten days and not more than 60 days prior to the meeting to
every owner of inembership interests entitled to vote at such meeting except as specified in Section
1.05 or as otherwise permitted by law. The business transacted at a special meeting of inembers is
limited to the purposes stated in the notice of the meeting.
Section 1.07. Waiver of Notice. A member may waive notice of the date, time, place and
purpose of purposes of a meeting of inembers. A waiver of notice by a member entitled to notice is
effective whether given before, at or after the meeting, and whether given in writing, orally or by
attendance. Attendance by a member at a meeting is a waiver of notice of that meeting, unless the
member objects at the beginning of the meeting to the transaction of business because the meeting is
not lawfully called or convened, or objects before a vote on an item of business because the item may
not lawfully be considered at that meeting and does not participate in the consideration of the item at
that meeting.
Section 1.08. Voting Ri h�ts. Subdivision 1. A member shall have voting power in proportion
to the value of the member's voting interest as provided in a member control agreement. Except as
otherwise required by law, an owner of a membership interest entitled to vote may vote any portion of
the membership interest in any way the member chooses. If a member votes without designating the
proportion of the membership interest voted in a particular way, the member is deemed to have voted
all of the membership interest in that way.
Section 1.09. Proxies. A member may cast or authorize the casting of a vote by filing a written
appointment of a proxy with a manager of the Company at or before the meeting at which the
appointment is to be effective. The member may sign or authorize the written appointment by
telegram, cablegram or other means of electronic transmission setting forth ar submitted with
information sufficient to determine that the member authorized such transmission. Any copy,
facsimile, telecommunication or other reproduction of the original of either the writing or transmission
may be used in lieu of the original, provided that it is a complete and legible reproduction of the entire
original.
Section 1.10. uorum. The owners of a majority of the voting power of the membership
interests entitled to vote at a meeting of the members are a quorum for the transaction of business,
unless a larger or smaller proportion is provided in the Articles of Organization of the Company or a
member control agreement. If a quorum is present when a duly called or held meeting is convened, the
members present may continue to transact business until adjournment, even though the withdrawal of
members originally present leaves less than the proportion otherwise required for a quorum.
Section 1.11. Acts of Members. Except as otherwise required by law or specified in the
Articles of Organization of the Company or a member control agreement, the members shall take
action by the affirmative vote of the owners of the greater of (a) a majority of the voting power of the
membership interests present and entitled to vote on that item of business or (b) a majority of the
voting power that would constitute a quorum for the transaction of business at a duly held meeting of
members.
2
Section 1.12. Action Without a Meetin�. Any action required or permitted to be taken at a
meeting of the members of the Company may be taken without a meeting by written action signed by
all of the members entitled to vote on that action. Any action, if the Articles of Organization or a
member control agreement so provide, may be taken by written action signed by the members who own
voting power equal to the voting power that would be required to take the same action at a meeting of
the members at which all members were present. The written action is effective when signed by the
required members, unless a different effective time is provided in the written action. When written
action is permitted to be taken by less than all members, all members shall be notified immediately of
its text and effective date.
GOVERNORS
Section 2.01. Number; Qualifications. Except as authorized by the members pursuant to a
member control agreement or unanimous affirmative vote, the business and affairs of the Company
shall be managed by or under the direction of a Board of one or more governors. Governors shall be
natural persons. The members at each regular meeting shall determine the number of governors to
constitute the Board, provided that thereafter the authorized number of governors may be increased by
the members or the Board and decreased by the members. Governors need not be members.
Section 2.02. Term. Each governor shall serve for an indefinite term that expires at the next
regular meeting of the members. A governor shall hold office until a successor is elected and has
qualified or until the earlier death, resignation, removal or disqualification of the governor.
Section 2.03. Vacancies. Vacancies on the Board of Governors resulting from the death,
resignation, removal or disqualification of a governor may be filled by the affirmative vote of a
majority of the remaining governors, even though less than a quorum. Vacancies on the Board
resulting from newly created governorships may be filled by the affirmative vote of a majority of the
governors serving at the time such governorships are created. Each person elected to fill a vacancy
shall hold office until a qualified successor is elected by the members at the next regular meeting or
any special meeting called for that purpose.
Section 2.04. Place of Meetin�s. Each meeting of the Board of Governors shall be held at the
principal executive office of the Company or at such other place as may be designated from time to
time by a majority of the governors or by the Chief Manager. A meeting may be held by conference
among the governors using any means of communication through which the governors may
simultaneously hear each other during the conference.
Section 2.05. Regular Meetings. Regular meetings of the Board of Governors for the election
of managers and the transaction of any other business shall be held without notice at the place of and
immediately after each regular meeting of the members.
Section 2.06. Special Meetin�s. A special meeting of the Board of Governors shall be called
for any purpose or purposes at any time by any governor by giving not less than two days' notice to all
governors of the date, time and place of the meeting, provided that when notice is mailed, at least four
days' notice shall be given. The notice need not state the purpose of the meeting.
3
Section 2.07. Waiver of Notice; Previously Scheduled Meetin�s. Subdivision 1. A governor
of the Company may waive notice of the date, time and place of a meeting of the Board. A waiver of
notice by a governor entitled to notice is effective whether given before, at or after the meeting, and
whether given in writing, orally or by attendance. Attendance by a governor at a meeting is a waiver of
notice of that meeting, unless the governor objects at the beginning of the meeting to the transaction of
business because the meeting is not lawfully called or convened and thereafter does not participate in
the meeting.
Subdivision 2. If the day or date, time and place of a Board meeting have been provided
herein or announced at a previous meeting of the Board, no notice is required. Notice of an adjourned
meeting need not be given other than by announcement at the meeting at which adjournment is taken of
the date, time and place at which the meeting will be reconvened.
Section 2.08. uorum. A majority of the governors currently holding office shall be necessary
to constitute a quorum for the transaction of business. In the absence of a quorum, a majority of the
governors present may adjourn a meeting from time to time without further notice until a quorum is
present. If a quorum is present when a duly called or held meeting is convened, the governors present
may continue to transact business until adjournment, even though the withdrawal of a number of the
governors originally present leaves less than the proportion or number otherwise required for a quorum.
Section 2.09. Acts of Board. Except as otherwise required by law or specified in the Articles
of Organization of the Company or a member control agreement, the Board shall take action by the
affirmative vote of a majority of the governors present at a duly held meeting.
Section 2.10. Participation by Electronic Communications. A governor may participate in a
Board meeting by any means of communication through which the governor, other governors so
participating and all governors physically present at the meeting may simultaneously hear each other
during the meeting. A governor so participating shall be deemed present in person at the meeting.
Section 2.11. Absent Governors. A governor of the Company may give advance written
consent or opposition to a proposal to be acted on at a Board meeting. If the governor is not present at
the meeting, consent or opposition to a proposal does not constitute present for purposes of
determining the existence of a quorum, but consent or opposition shall be counted as a vote in favor of
or against the proposal and shall be entered in the minutes or other record of action at the meeting, if
the proposal acted on at the meeting is substantially the same or has substantially the same effect as the
proposal to which the governor has consented or objected.
Section 2.12. Action Without a Meetin�. An action required or permitted to be taken at a
Board meeting may be taken without a meeting by written action signed by all of the governors. Any
action, other than an action requiring member approval, if the Articles of Organization or a member
control agreement so provide, may be taken by written action signed by the number of governors that
would be required to take the same action at a meeting of the Board at which all governors were
present. The written action is effective when signed by the required number of governors, unless a
4
different effective time is provided in the written action. When written action is permitted to be taken
by less than all governors, all governors shall be notified immediately of its text and effective date.
Section 2.13. Committees. Subdivision 1. A resolution approved by the affirmative vote of a
majority of the Board may establish committees having the authority of the Board in the management
of the business of the Company only to the extent provided in the resolution. Committees shall be
subject at all times to the direction and control of the Board, except as provided in Section 2.14.
Subdivision 2. A committee shall consist of one or more natural persons who need not
be governors, appointed by affirmative vote of a majority of the governors present at a duly held Board
meeting.
Subdivision 3. Section 2.04 and Sections 2.06 to 2.12 hereof shall apply to committees
and members of committees to the same extent as those sections apply to the Board and governors.
Subdivision 4. Minutes, if any, of committee meetings shall be made available upon
request to members of the committee and to any governor.
Section 2.14. S�ecial Litigation Committee. Pursuant to the procedure set forth in Section
2.13, the Board may establish a committee composed of one or more independent governors or other
independent persons to determine whether it is in the best interests of the Company to pursue a
particular legal right or remedy of the Company and whether to cause, to the extent permitted by law,
the dismissal or discontinuance of a particular proceeding that seeks to assert a right or remedy on
behalf of the Company. The committee, once established, is not subject to the direction or control of,
or termination by, the Board. A vacancy on the committee may be filled by a majority vote of the
committee members. The good faith determinations of the committee are binding upon the Company
and its governors, managers and members to the extent permitted by law. The committee terminates
when it issues a written report of its determinations to the Board.
Section 2.15. Com�ensation. The Board may fix the compensation, if any, of governors.
MANAGERS
Section 3 A 1. Number and Desi na�n. The Company shall have one or more natural persons
exercising the functions of the position of Chief Manager and Treasurer. The Board of Governors may
elect or appoint such other managers or agents as it deems necessary for the operation and management
of the Company, with such powers, rights, duties and responsibilities as may be determined by the
Board, each of whom shall have the powers, rights, duties and responsibilities set forth in this
Operating Agreement unless otherwise determined by the Board. Any of the positions or functions of
those positions may be held by the same person.
Section 3.02. Chief Mana�er. Unless provided otherwise by a resolution adopted by the Board
of Governors, the Chief Manager (a) shall have general active management of the business of the
Company; (b) shall, when present, preside at all meetings of the members and Board; (c) shall see
that all orders and resolutions of the Board are carried into effect; (d) may maintain records of and
5
certify proceedings of the Board and members; and (e) shall perform such other duties as may from
time to time be prescribed by the Board.
Section 3.03. Treasurer. Unless provided otherwise by a resolution adopted by the Board of
Governors, the Treasurer (a) shall keep accurate financial records for the Company; (b) shall deposit
all monies, drafts and checks in the name of and to the credit of the Company in such banks and
depositories as the Board shall designate from time to time; (c) shall endorse for deposit all notes,
checks and drafts received by the Company as ordered by the Board, making proper vouchers therefare;
(d) shall disburse company funds and issue checks and drafts in the name of the Company, as ordered
by the Board; (e) shall render to the Chief Manager and the Board, whenever requested, an account of
all of such manager's transactions as Treasurer and of the financial condition of the Company; and (�
shall perform such other duties as may be prescribed by the Board or the Chief Manager from time to
time.
Section 3.04. President. Unless otherwise determined by the Board of Governors, the
President shall be the Chief Manager of the Company. If a manager other than the President is
designated Chief Manager, the President shall perform such duties as may from time to time be
assigned by the Board.
Section 3.05. Vice Presidents. Any one or more Vice Presidents, if any, may be designated by
the Board of Governors as Executive Vice Presidents or Senior Vice Presidents. During the absence or
disability of the President, it shall be the duty of the highest ranking Executive Vice President, and, in
the absence of any such Vice President, it shall be the duty of the highest ranking Senior Vice President
or other Vice President, who shall be present at the time and able to act, to perform the duties of the
President. The determination of who is the highest ranking of two or more persons holding the same
position shall, in the absence of specific designation of order of rank by the Board, be made on the
basis of the earliest date of appointment or election, or, in the event of simultaneous appointment or
election, on the basis of the longest continuous employment by the Company.
Section 3.06. Secretarv. The Secretary, unless otherwise determined by the Board of
Governors, shall attend all meetings of the members and all meetings of the Board, shall record or
cause to be recorded all proceedings thereof in a book to be kept for that purpose, and may certify such
proceedings. Except as otherwise required or permitted by law or by this Operating Agreement, the
Secretary shall give or cause to be given notice of all meetings of the members and all meetings of the
Board.
Section 3.07. Authoritv and Duties. In addition to the foregoing authority and duties, all
managers of the Company shall respectively have such authority and perform such duties in the
management of the business of the Company as may be designated from time to time by the Board of
Governors. Unless prohibited by a resolution approved by the affirmative vote of a majority of the
governors present, a manager elected or appointed by the Board may, without the approval of the
Board, delegate some or all of the duties and powers of a position to other persons.
Section 3.08. Term. Subdivision 1. All managers of the Company shall hold office until their
respective successors are chosen and have qualified or until their earlier death, resignation or removal.
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Subdivision 2. A manager may resign at any time by given written notice to the
Company. The resignation is effective without acceptance when the notice is given to the Company,
unless a later effective date is specified in the notice.
Subdivision 3. A manager may be removed at any time, with or without cause, by a
resolution approved by the affirmative vote of a majority of the governors present at a duly held Board
meeting, subject to the provisions of any member control agreement.
Subdivision 4. A vacancy in a position because of death, resignation, removal,
disqualification or other cause may, or in the case of a vacancy in the position of Chief Manager or
Treasurer shall, be filled for the unexpired portion of the term by the Board.
Section 3.09. Salaries. The salaries of all managers of the Company shall be fixed by the
Board of Governors or by the Chief Manager if authorized by the Board.
INDEMNIFICATION
Section 4.01. Indemnification. The Company shall indemnify its managers and governors for
such expenses and liabilities, in such manner, under such circumstances, and to such extent, as required
or permitted by Minnesota Statutes, Section 322B.699, as amended from time to time, or as required or
permitted by other provisions of law.
Section 4.02. Insurance. The Company may purchase and maintain insurance on behalf of any
person in such person's official capacity against any liability asserted against and incurred by such
person in or arising form that capacity, whether or not the Company would otherwise be required to
indemnify the person against the liability.
MEMBERSHIP INTERESTS
Section 5.01. Statement of Membership Interest. At the request of any member, the Company !
shall state in writing the particular membership interest owned by that member as of the moment the
Company makes the statement. The statement must describe the member's rights to vote, to share in
profits and losses, and to share in distributions, as well as any assignment of the member's rights then
in effect.
Section 5.02. Declaration of Distributions. The Board of Governors shall have the authority to
declare distributions upon the membership interests of the Company to the extent permitted by law.
Section 5.03. Transfer of Membership Interests. Membership interests in the Company may be
transferred only to the extent permitted by law and subject to any member control agreement.
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MISCELLANEOUS
Section 6.01. Execution of Instruments. Subdivision 1. All deeds, mortgages, bonds, checks,
contracts and other instruments pertaining to the business and affairs of the Company shall be signed
on behalf of the Company by the Chief Manager, or the President, or any Vice President, or by such
other person or persons as may be designated from time to time by the Board of Governors.
Subdivision 2. If a document must be executed by persons holding different positions
or functions and one person holds such positions or exercises such functions, that person may execute
the document in more than one capacity if the document indicates each such capacity.
Section 6.02. Advances. The Company may, without a vote of the governors, advance money
to its governors, managers or employees to cover expenses that can reasonably be anticipated to be
incurred by them in the performance of their duties and for which they would be entitled to
reimbursement in the absence of an advance. I
Section 6.03. Compan�Seal. The seal of the Company, if any, shall be a circular embossed
seal having inscribed thereon the name of the Company and the following words:
"Limited Liability Company Seal Minnesota."
Section 6.04. Fiscal Year. The fiscal year of the Company shall be determined by the Board of
Governors. ,
Section 6.05. Construction. This Operating Agreement is subject to the terms of any member
control agreement from time to time in effect and to the extent inconsistent the member control
agreement shall be controlling.
Section 6.06. Amendments. The Board of Governors shall have the power to adopt, amend or
repeal the Operating Agreement of the Company, subject to the power of the members to change or
repeal the same, provided, however, that the Board shall not adopt, amend or repeal any Section fixing
a quorum for meetings of inembers, prescribing procedures for removing governors or filling vacancies
in the Board, or fixing the number of governors or their classifications, qualifications or terms of
office, but may adopt or amend a Section that increases the number of governors.
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I
DEVELOPMENT AGRP.EMENT
BY AND BETWEEN
TH� C1TY OF PRIOR LAKE
AND I
EAGLE CREEK DEVELOPIVIENT LLC
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1361703v4 �
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TABLE OF CONTENTS � �',
Page I
ARTICLEI DEFINITIONS ..........................,..........,..................,........................................ 2
Section Definitions ............................................................................................ 2
ARTICLE IT REPRESENTATIONS AND WARRANTIES ................................................ �
Section 2,1 Representations and Warranties ofthe City .........................................
Section 2.2 Representations and Warranties of the Developer ............................... 4
ARTICLE III UNDERTAKiNGS BY DEVELOPER AND CITY ....................................... 6
Section 3.1 Reimbursement of Site Impravements ................................................. 6
Section 3.2 Reiynbursement: Note ..............�...........�.......�.....�.....�............ b
..............
Section 3.3 Compliance With Low and Moderate Ixicome Requiren�ents .............. 7
5ection 3.4 No Business Subsidy ............................................................................ 7
Section 3.5 No RepresentationRegarding Tax Increment.....,.....•.....,•..••••.••.•.••••�•• �
ARTICLE EVENTS OF DEFAULT ............................................ .................................... 9
Secfiioi34.1 Events ofDefaultDefned ••••••••••••���••••••••��••�•�•••••�•�•••••••••"
Section Remedies on Default ............................................................................ �
Seotion �4.3 No Rernedy Exclusive ........................................................................
Section 4.4 No Implied Waiver ............................................................................
Section 4.5 Agreement to Pay Attorney's Fees and Expenses .............................. 10
Section 4.6 Indeinnificatioai of City ...................................................................... 14
ARTICLE V DEVELOPER'S OPTION TO TERMINATE AGREEMENT ..•••••..•••...•••••, 12
Section 5.1 The Developer's Option Co Ternainatc ...............................................
Section 5.2 Action to Terminate ...........................................................................
Section Effect of Termination ......................................................................... 12
ARTICLE VI ADDITIONAL PROVISIONS ......................................................................
Section 6.1 Restrictions on Use ......................................................
S ection 6.2 Conflicis of Interest ............................................................................ 13
Sectran 6.3 Titles of Articles ar�cl Sections ....................................................•.••••• 13
Section 6.4 Notices and Derziands ........................................................................ 13
Section Counterparts ....................................................................................... l.4
Section Law Governing .................................................................................
Section �xpiratian ...........................................................................................
Section 6.8 Provisivns Surviving Rescission or Expiration ..................................
Section 6.9 Assignability af Agreeinent and Note ................................................ 14
Secti fi.10 Discrimination .................................................................................... l4
EXHIBIT A — Description of Developmeiit Property ............................ .........•. •. ••• • • • •• • • . • ••.. • •• • • • A-1
EXHIBIT Compliance Certificate ....................................................................................... B-1
EXHIBIT Fonn of Note ........................................................................................................ C-1
EXHIBIT D--Dcscription of Site Improvement .......................................................................D
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DEVELOPMLNT AGREEMENT I
THiS AGREEMENT, made as of the bth day of March 2002, l�y and between th� City of
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Prior Lalce, Minnesota (the "City"), a municipal corporation organized and existing under the
laws of the State of Minnesota and Eagle Creek Development LLC (the "Developer"), a
Minnesota limited liability company.
WITNESSETH:
WHEREAS, pursuant to Minnesota Statutes, Section 469.124 through 469.134, the City
has formed Developxzient Distric# No. 3{the "Development District") and has adopted a
developrrxent program the�•efor (the "Developmei�C Program"); and
WHEREAS, pursuairt to thc provisions of Minnesota Statutes, Section 4b9.174 through
469.179, as amended (hereinafter, the "Tax Increment Ac#"), the City has created, withi�� the
Development District, Tax Increment Financing District No. 3-1 (the "Tax Increment District")
and has adopted a tax increinent finaneing plan, dated Deceznber 17, 2001 (the "Tax Inereu�ent
Plan") which provides for the use of tax iiicrement financing in connection with certain
developinent within #he Development District; and I
WHEREAS, in order to achieve the objectives of the Development Program and I
particularly to m�,ke the land in the Development District available for aevelopment by private ,
enterprise in conformance with the Development Program, the City has determined to assist the
Developer with the financing of certain costs of a Project (as hereinafter defined) to be
constructed within the Tax Increment District as mare particularly set forih in this Agreement;
and
WHEREAS, tlie City believes that the developmcnt and construction of the Projecl, and
fulfillment of this Agreeinea�t are vital and are in the Uest interests of the City, the health, safety,
rnorals and wel Pare of residents of the City, and in accordance with tlie public purpose and
provisions of the applicable state and local laws and requirements under which the Project has
l�een underta.lcen and is being assisted.
NOW, THEREFOR�, in consideration of #he premises and t11e mutual obligations of tl�e
parties hereto, each of them does liereby covenant and agree with the other as follows:
13G1703v4
.ARTICLE I
DEFII�IITIONS
Section 1.1 Definitions. All capitalized terms used and not otherwise defined herein
shall have the foliowing meanings unless a different nleaning clearly appears from the context:
Agreement meat�s this Agreement, as the san�e may be from time to time modified, ,
amended or supplemented;
Business Da ineans any day except a Saturday, Simday or a legal holiday or a day an
which banking institutians in fl�e City are authorized by law or executive arder to close;
C� means the City of Prior Lalce, Minnesota;
Compliance Certifieate mealls the Compliance Cex in substantially fhe form
attached hereto as E�chibit B;
Develo er means Eagle Creek Developmcnt LLC, a Minnesota limited liability company,
its successors and assigns;
D eveloUm ent District means tl�e real property described in the Development Program;
Develo ment Pro •ani means the deveiopment prograrn approvcd in connection with the
De�clopment Disti7ct;
Development Property means the real propei described in Ea�hibit A attached to this
Agreement;
Event of Default rneans any of the events desciibed in Section 4.1 hereof;
Note means the Tax Incremcnt Revet�ue Note (Eagle Creelc Develapinent LLC Project) to
be executed by the City and delivered to the Developer pursuant to Article III hereof, a copy of
which is aftached hcreto as Exhibit C.
Note Payment Date means August 1, 2004, and each Februairy 1 and August 1 of each
year thereafter to and including February 1, 2�24; provided, that if any such Note Payment Dale
should not be a Business Day, the Nate Payment Date shall be the next succeeding Business
Day;
Prime Rate nieans the rate of interest fram lirne to tirue publicly announced by U.S. Banl�
National Association in S�. Paul, Minnesota, as its "prime rate" or "reference rate" or any
successor rate, whicli rate shall change as and when that rate or successor rate changes;
Project naeans the developmenl of an approximately 54 unit senior housing facility
consisting of 14 one bedroom, 4 one bedroom plus den and 2 baths units, 32 two bedrooin units
t3ti17�3v4 �
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and 4 two bedroom plus den and 2 baths units and related improvements to be lacated on the
Development Property;
PUD Agreement means Contract For Development of Land as a Pla�ined Unit
Development in the City of Prior Lake to Ue known as Creekside Estates, dated December 18,
2000;
Site Itnprovements means the site improvernents described on Exhihit D to be undertaken
on the Development Property;
State rneans the State of Minnesota;
Tax Increments means 90% of the tax increnients derived from the Develapment
Property and received by the City in accordance with the provisions of Minnesota Statutes,
Section 469.177;
Tax Incrcment Act means Minnesota Sta#utes, Sections 4b�,174 through 469.179, as
amendcd;
Tax Increment District means Tax I�icrement Financing District No. 3-1 located within
the Development District, the description of which is set forth in the Tax Increment Financing
Plan, which was qualified as a housuig district under the TAx Increment Act;
T� Inerement Fit�ancing Plan means the t� increment financing plan approved for the
Tax Increment Dish by the City Council on December S 7, 2001;
Tax Increment Note flr Note means tl�e Tax Tncrement Revenue Note (Eagle Creek
Development LLC Project) to be executed by the City ai�►d delivered to the Developer pursuant to
Article III hereof, a copy of which is attached liereto as Exhibit C,
Termination Dale mcans the final Note Payment Date;
Unavoidable Delays means delays, outside the control of the party claiming its
occurrence, which are the direct result af unusually severe or prolon�ed baci weather, acts of
God, fire or other casualty to the Project, litigation con�menced by third parties which, by
injunctian or other similar judicial aetion or by the exereise of reasonable discretion, directly
results in delays, or acts of any federal, state or local governmental unit (other than the City)
which directly result in delays.
13G1703v4 3
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of the City, The City m�akes the following
representations and wananties:
(1) The City is a municipal coz�oration an.d has the power to enter into this
Agreement and carry out its abligativns hercunder.
(2) The Tax Inerement District is a"housing district" within the meaning of
Minnesota Statutes, Section 469.174, Subcii�vision 11 aud was created, adopted and approved in
aceordance with the ferms of the Tax Increment Act.
{3} The development contemplated by ihis Agreernent is in conformancc with the
development objectives set fortli in tl�e Development Program.
(4) Ta finance certain. casts within the Taat Tncrement Distriet, the City proposes,
subj ect to the further provisions of this Agreemeiit, to finance a portion of the Site Improvements
installed iu connection with the Project as fi�rther pro�idcd in this Agreement.
(5) The City malces no representation or warranty, either express or innplied, as
the Development Property or its condition or the soil conditions thereon, ar that the Developmen,t
Property shall be suitab]e for the Developer's purposes or needs.
Section 2.2 Representations and Warranties of the Developer. The Developer makes the
follawing representations and warranties:
(1) The Developer is a Minnesota limited liability com�pany and has power to
enter into tlus Agreement and to perfor�n its obligations hereunder and is nat in violation of the
laws of the State.
(2) The Developer shall cause the Project to be installed in accordance with the
tenns of this Agreement, the Developmcnt Progra�x►, the PUD Agreement, and all local, state and
federal iaws and regulations {includiag, but not limited to, environtnental, zoning, energy
conservation, building code and public health laws and regulations).
(3) The cotistr�iction of the Praject would not be undertaken by the Developer,
and in the opinion of the Developer would not be economically feasible within the reasonably
foreseeable fiiture, without the assistance and bei�efit to the Developer provided for in this
Agreernent.
(4} The Developer will use its best efforts to obtain, or cause to be obtained in a
timely manner, a11 required perniits, licenses and approvals, and has met, in a timely manner, a11
requirements of all applicaUlc local, state, and federal laws and regulatians and the PUD
Agreement which must have been abtained or met before the Project may be lawfully
constructed.
1361703v4 4
(5) Neither the executaon and delivery of this Agreeinent, tiie consummation of
the tra�lsactions contemplated hereby, nor the fulfillment of or compliance with the terms and
conciitians of this Agreement is prevented, limited by or conflicts with or results in a breach of,
the texrns, conditions or provision of any contractual restriction, evidence of indebtedness,
agreetnent or instrutnent of wl�atever nature to which the Developer is now a party or by which it
is bound, or constitutes a default under aiay of the foregoing.
(6) The Developer will cooperate with the City with respect to any litigation
commenced with respect to the Project.
{7) The Developer will cooperate with the City in resolution of any traffic,
parking, trash removal ar public safety problems which may arise in connection with the
constiruction and operation of the Project.
(8) The constiuction of the Proj ect will cominence ozi or before June i, 2002 and,
barring Unavoidable Delays, the Project will be substantially completed Uy Deceznber 31, 2002.
13C,1703v4 S
ARTICLE III
UNDERTAKINGS BY DEVELOPER AND CITY
Section 3,1 Reimbursemeut of Site Tmprovements. The pai�ies agree that the costs of the
installation of the Site Ilnprovements are essential to the snccessfiil completion of the Proj ect.
The cost of fl�e Site Improvements shall be paid by tlie Developer. The City shall reimburse the
Developer for the lesser of $51 G,24Fi or the costs of the Sitc Improvements actually incurred by
the Developer as further pravided in Section 3.2 hcreof. The Developer has provided the City in
connection with the Project a development cost analysis which includes a projeet budget and a
total development cast (the "Tatal Develapment Cost"}. The Developer shall provide the City
upon s�.ibstantial completion of the Project an updated Total Development Cost in a fo�m
acceptable to the City evidencing the actuai TQtal Development Cost incurred by tlie Developer.
In the event the Total Development Cost is less than $5,264,55� the amotmt of tl�e Site
Improvements to be reimbursed by the City shall lae reduced by the amount that the �ctual Total
Developmenti Cost incurred by thc Developer is iess than $5,264,556. The amount of the Site
Improvements paid by tlle Developer (bu# not to exceed $516,246) after deducting the amount, if
any, reqttired to be deducted by lhe foregoing sentence shall be referred to as (the
"Reimbursement Amount").
Section 3.2 Reilnbtusement: Note. The City shall reimburse for the cosis identified in
Seet�on 3.1 through the issuance of tl�e City's Note in suUs#antially the form attached to this
Agreement as Exhibit C, subject to the following conditions:
(1) Tha Note shall bc issued and delivared wllei� the Devel.oper shall have
dernonstrated in writing to the reasonable satisfaction of the City that the canstruction of the
Project has been substantially co�npleted and (i) that tha Develaper has incurred and paid all of
the Site Improvement costs described in and limited by Section 3.1, (ii} shall have submittcd to
the City paid invoices or statements for those costs in an anaount not less than the
Reimbursement Amount, and {iii) the Developez has provided the City with the Total
Development Cosl as provided in Section 3.1,
(2) The unpaid principal amount of tlle Note sha11 bear interest from Che date of
issuance of fihe Note, at 7% per annuin. Interest sl�.all Ue computed on the basis of a 360 day year
consisting of twelve (12) 34-day months. Tnterest accruing on the Note from the date of issuance
of the Note to February 1, 2004 sha11 be added to the principal of the Note.
{3) The principal ainatint of the Note and the interest thereon shall be payable
solely from the Tax Tncremcnts.
(4) Providcd tl�at the Dcveloper has filed a Compliance Certificate in accordance
with the provisions of Section 3.3, on each Note Payment Date and subject to the provisiaiis of
flle Note, tlie City shall pay, against the principal aud interest outslanding on the Note, Tax
Increinents received by the City during the preceding b rnonths. All such payinents shall be
applied first to accrued interest and then to reduce the principal of the Note.
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(5} The Note shall be a special and limited obligation of the City and not a
general obligation of the City, and only Tax Increments shall be used to pay the principal and
intexest on the Note, If, on any Note Payment Date, the Tax Increments for the payment af the
accrued and unpaid interest o�1 the Notc are insufficient for such purposes, the difference s1�a11 be
carried forward, without intexest accruing thereon, and shall be paid if and to the extent that on a
fidure Note Payn�ent Date there axe Tax Increments in exccss of the amounts needed to pay the
accrued interest then due on the Note.
(b) The City's obligatioz� to make payments on the Note on any Note Payrnent
Date or any date thereafter shall be conditioned upoi� the requirement that (A) there sha11 not a#
that time be an Event of Default that has occurred and is continuing under this Agreement and
(B) this Agreement shall not have l�een rescinded pursuant to Section 4.2(b).
(7) The Note shall bc governed by and payable piirsuant to the additional tercns
thereof, as set forth in Exhibit C. In the event of any conflict between the terms of the Note and
tihe terms of this Section 3.2, the tenns of the Note shall govern. The issuance of the Note
pursuant and subject to the ter�ns of this A�'eement, and the talcing by the City of such additional
actions as bond counsel for the Note inay reqttire in corinection therewitl.i, are hexeby authorized
and approved by the City.
Section 3.3 Com liance With Low and Moderate Incozne Re uirements. Ix� accordance
with the provisions of Miruiasota Statutes, Section 469.1761, the Developer covenants that for a
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period ending on the later of (i) the �z1al Nate Payment Date, {ii) March 6, 2022, or iii t e
termination date of the Tax Increment District at least 20% of the residential units in the Project
will be occupied by individuals whose income is 50% or less of area median gross income. In
adciition, the Developer covenants that maximum gross re�it (which includes all tenant paid
atilities exce�t telephone) for 20% of units shall not excced 30% of 50% of the median family
incoxne for Scott County. On or Uefore January 1 and July 1 of each yea.r during the term of this
Agreement commencing July 1, 2004 the Developer sl�all submit to the City a Compliance
Certificate covering the � month period preceding the da#c af the Compliance Certificate
eertifying that the Praject is in coi��pliance witli the provisians of this Seetion 3.3. The
Developer will establish sucln rnonitoring proceciures with respect to applicants for and occupants
of dwelling units in the Project as the City ntay reasonably require to assure connpliance with this
Section.
Section 3.4 No Business Subsidy. This Agreement does not constitute a business
subsidy witliin the meaning of Minnesota Statutes, Sections 116J,993 to 116J.995 by reason of
the exception for assistance of housing.
Section 3.5 No Representation Re�arding Tax Increinent. The City's financial
comr�ihnent under this Agreement with regard to reimbursement for the Site Improvemenfs is a
revenue obligation only and will be paid by the City only out of Tax Tncrements. The City
makes no represexltations or warranties that the Tax Incrernents will be sufficient to reimburse
the Developer for the Site Improvements. The Develope�' acl�nowledges that Tax Increment is
suhject to calculations by the County and changes in State law and that some or al1 of the cost of
the Site Iinprovements may not be repaid prior to FeUruary 1, 2024. Tlie Developer
acicnowledges that the 20�1 State ]egislahire enacted siguificant changes to the Tax Inc�•ement
13G1703v4 7
Act and to the property tax stiucture in the State, which changes may have an adverse impact on
tlxe amount of Tax Incrennents. The Developer also acicnowleciges that the estimates of Tax
Increments which may Iiave been made by the City or its agents, officers or employees are
estimates only and are not intended fo� the Developer's reliance.
1361703v4 8
ARTICLE IV
EVENTS OF DBFAULT
Section 4.1 Events of Default Defined Thc following shall be "Events of Default" under �
this Agreement and the term "Event of Default" shall mean whenever ifi is uscd in this
Agreement any one or more of the following evetits:
{a) Failure by lhe Developer to tirnely pay any ad valorem real property
taxes assessed with respect to the Development Pruperty.
(b} Failure by the Developer to cansc the construction of the Praject to be
completed pursuant to the tenns, conditions a�id limitations of this Agreement.
(c) Failure of the Developer to observe or perform any other covenant,
condition, obligation or agreement on its part to be observed or performed under this
Agrcement.
(d) 11ie hoider of any mortgage on thc Development Property or any
improvements thereon, or any portion thereof, con�mences foreclosure proceedings as a
result of any default under tlie applicable mortgage docuanents.
(e) If the Developer shall .
� (A) �le any pctition in bankruptcy or for any reorganization,
a�-rangement, coinposition, readjustment, Iiquidation, dissolution, or similar relief �
under the Unitcd States Bankruptcy Act of 1978, as amended or under any sinlilar �
federal or state law; or i
(B} malce an assignment for the benefit of its creditors; or
(C} admit i�� writing its inability to pay its debts generally as lhey
become due; or
(D) be adjudicated a bankrupt or insolvent; or if a petition ox•
answer proposing the adjudication of the Developer, as a bankrupt or its
reorganization under any presez�t or future federal bankruptcy act or any simila�
fedcral or state Iaw sha11 be filed in any court and such petition or answer shall not
be discharged or denied within sixly (b0) days after the filing tl�ereaf; or a
receiver, t� or liquidatoz� �f the Devcloper, or of the Praject, or part thereof,
shall be appointed 'ui any proceeding brought against the Developer, and shall not
be discha.rged witllin sixty (CO) days ai�er such appointment, or if ihe Developer,
shall conseirt tv or acquiesce in such appointment.
Section 4.2 Remedies on Default. Whenever any Event of Default referred to in Section �
4.1 occurs and is continuing, the City, as specified below, may talce any one or more of the
following actions afler the givrng of tllirty (30) days' written notice to the Developer citing with
1361703v�i 4
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specificity the item or items of default and notifying the Developer that it has thirty (30) days
within wkuch to cure saicl Evcnt of Default. If the Evcnt of Default has not been cured within
said thirty (30) days:
(a) Tlie City may suspend its performance under tlus Agreement until it
receives assurances from thc Developer, deemed adequate by the City, that #he Developer
will cure its default and continue its performance under Chis Agreement.
(b) The City may cancel and rescind the Agreement.
(c) The City may take any action, inchlding Iegal or administrative action,
in law or eqttity, which may appear necessary or desirable to enforce pez'fortnance a,nd
observance of any ol�ligation, agreement, or covenant of the Developer under this
Agreement.
Section 43 No Remedv Exclusive. No remedy herein conferred upon or reserved to the
City is intended to be exchisive of any other available remedy or remedies, but each and every
such remedy shall be ct►mulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power accrui�g upon any dcfal�lt shall irnpair any such right or power or
shall be construed to be a waiver thereof, but any sucl� right and power may be exercised from
time to time and as often as may be deerned expedienl:.
Section 4.4 No Trnplied Waiver, ln the event any agreement contained in this Agreement
should be breached by any party and lhereafter waived by any other pa�ty, such v�aiver sha11 be
limited t� the particul�u breach so waived and shall not be deemed to waive any other concurrent,
previous or subsequent breaclx hereunder.
Section 4.5 Agrcement to Pav Attornev's Fees and Expenses. Whene�er any �vent of
Default occurs and the City shall employ attonieys or incur otl�er expenses for the co3lection of
payments due or to become due or for the enforcement or performance or observance of any
obligation or agreernent on the part of the Developer herein contained, tlie Develaper agrees that
they sha11, on demand therafor, pay to the City the reasonable fees of such attorneys and such
other expenses so incurred Uy the City.
Sectiian 4.G Indemnificatio�i of City.
(1) The Developer releases from and covenants and agrees that the City, its
governing body �nembers, officers, agents, inchiding the independent contractors, consultants
and legal counsel, scrvants and employees thereof (h.ereinafter, for purposes of this Section,
collectively the "Tndemnified Parties") shall not be Iiable for and agrees to indemnify and hold
harmless the Indemnified Parties �zgainst any loss or damaga to property or any injury to or death
of any person occurring al or about or resulting from any defect in the Project, provided that the
foregoing indeinni£'ieation shall not be effectivc for any actions of the �ndemni�ied Parties that
are not contemplated by this Agreement.
{2} Except for any willfiil misrepresentation or airy willful or wanton misconduct
of the I�idemnified Parties, the Dcveloper agrees to protect and defend the Indemnified Parties,
13fi1703v4 1 �
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now and forever, and further agrees to hold the aforesazd harmless fi�om any claim, demand, suit,
action or other proceeding wliatsoever by any person or entity whatsoever arising oz° purportedly
arising from the actions or inactions of the Developer {or if other persons acting on its behalf or
uilder its direction or control) under this Agreement, or the hansactians contexnplated hereby or
the acquisition, cot�stniction, installatioia, owncrship, and operation of the Project; provided, that
tliis indemnificatioii shall not apply to the warranties made or o�ligations undertaken by the City
in this Agreement or to any actions undertaken by the City which are not contemptated by this
Agreement but shall, in any evei�t and withaut regard to any fault on the part of the City, apply to
any pecuniaiy loss or penalty (includiyig interest therean from the date the loss is incuned or
penalty is paid by the City at a rate equal ta thc Prime Rate) as a result of the Project causing the
Tax I�icrement Dishict to not qualify or cease to qualify as a"housing district" under Section
469.174, Subdivision 11, oi'the Act or to violate limitations as to the use of Tax Increments as
set forth ui Sectian 469.176, Subdivision 4d,
(3) All covenants, stipulations, proinises, agreemez�ts and obligations ofthe City
cantained herein shall be deen�ed fo be the covenants, stipulations, promises, agreeinents and
obligations of the Ciry and not of any goverr�ing body member, officer, agent, sorvant or
employee af the City.
�3�� �o3�a 11
.ARTICLE V
DEVELOPER'S OPTION TO TERMINATE AGREEMENT
Section 5.1 The Developer's Oi�lian to Terminate. This Agreement may be terminated
by Developer, if (i} the Developer is in coi�ipliance with all material terms of this A�reement and
no Event of Default has occunred; aud (ii) the City fails to comply with auy material term of this
Agreement, and, after written notice by the Developer of such failure, the City has failed to cure
such noncompliancc within ninety (90} days of receipt of such notice, or, if such noncompliance
cannot �-easonably be cured by the City vvithin ninety (90) days, of receipt of such notice, the
City has not provided assurances, reasonably satisfactoiy to the Developer, that such
noncompliance will be cureci as soon as reasonaUly possible.
Section 5.2 Action to Terminate. Teimination of this A�reement pursua�it lo Section S.1
musC be accoinplished by writteii notification by the Developer to the City witl�in sixty (6U) days
after the date when such optian to termviate may first be exercised. A failure by the Developer
to terminate this Agreement within such period constitutes a waiver by the Developer af ifs
rights to teiminate this A�reement due to such occurrence or eveixt.
Section 5,3 Effect of Termination. if this Agreeinent is ternlinated pursuant to this
Article V, this A�eement sl�all be fiom such date forward null and void and of no furthcr effect;
provided, however, the termination of this Agreement sliall not affect the xights of either party to
institute any action, claim or demand for damages suffered as a result of breach or default of the
terms of this Agreement by the other party, or to recover amounts which had accrued and
became due and payable as of tl�e date of stich termination. Upon termination of this Agreement
pursuant to this Article V, the Developer shall be free to proceed with the Project ai its own
expense and without regard to the pr�visions of this Agreement; provided, however, that the
Cify sha11 have no further obligations to the Developer with respect to reimbursement of the
expenses set forih in 5ection 3.2.
13G]703v4 � 2
ARTICLE VI
ADDITIONAL PROVISIONS �
Section b,1 Restrictions an Usc. The Devalaper agrees for itself, its successors and �
assigns and every successor in interesi ta the Developn�ent Property, or any part thereof, that the �
Developer and such successors and assigns shall operate, or cause to be operated, the Project as a I
senior housing facility that complies witlz ihe low and moderate income requirements set forth in
Section 3.3 and in the PUD Agreement and shall dev�te the Development Propezty to, and in
accordance with, thc uses specified in this Agreement and in the PUD Agreement.
Sectio:n 6.2 Conflicts of Interesl No meznber of the gnverning body ar other official of
the City shall have any financial interest, direct or indirect, in this Agreement, thc Developinent
Property or the Project, or any contract, a�'eemcnt or other transaction contemplated to occi�r or
be unciertal�en thereunder or wii:h respect tliereto, nor shall any such member of the governing
body or ather off"icial participate in any decision xelating to the Agreeinent whicla affects his or
l�er personal uiterests or the interests of any corporatiion, partaiership or association in which he
or she is directly or indirectly interested. No mcmber, official or employee of tl�e City shall Ue
personally liaUle to tl�e City in the event of any dePatrlt or breach by tlie Devcloper nr successors I
or on a�iy obiigations �.inder the terms of this A�'eement. �
Section 6.3 Titles of Articles and Sections. Any titles of the several parts, articles and �
sections of the Agreernent are inserled for convenience of reference only and shall be ,
disregarded in canstruing or interpretin� any of ils provisions.
Section b.4 Notices and Demands. Except as otl�.erwise expressly provided in this
Agreement, a notice, demand or olher communicatioz� under this Agrecment by any party to an�y i
other shall be sufficiantly given or delivered if it is dispatched by x'egistered or certified mai1, �
postage prepaid, retun� receipt requested, or delivered personally, and �
�
(a) in the case of the Developer is addressec� io or delivered personally to: �
Eagle Creek Devalopment LLC
7765 175`" St�eet East �
Prior Lake, MN 55372 I
(b) in the case of thc City is addressed to or delivered personally to the
City at:
City of Prior Lake �
1b200 Eagle Creek Road �
Prior Lake, MN 55372-1787 �
or at such other address with respect Ca any such paity as that party may, frvin time to time, �
designate in writing and foi�ward to the other, as provided in this Section. �
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1361703v4 13
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Section 6,5 Counterpaxts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one and the same instrument.
Section G.6 Law Goveining. This Agreement will be govenled and conshued in
accordance with the laws of tlie State.
Section G.7 Expiration. Tliis A�een�ent shall expire on tli.e Tcrmination Date, unless
earlier terminated or reseinded in aceordance with its terms.
S`OCt1011 6 ,8 Provisions Surviving Rescission or Ex�• Sections 3.3, 4.5 and 4.6
shall survive any rescission, termination or expiration flf this Agreement with respect to or
arising out of any cvent, occurrence or circumstance existix►g prior to the date thereof.
Section 6.9 AssignaUility of Agreement and Note. This Agreement and the Note may be
assigned only with the prior written conseni of the City.
Section 6.10 Discrimination. The Dcveloper agrees tv abide by aIl provisions of Mizui.
Stat. Section 181,59, as may Ue amended fram time to time, entitled Discriminatian on Accow�.t
of Race, Crced, or Color Prohibited ii� Cont�act, and tl�e provisions of Minn. Stat, Seetion
363.03, as may be amended from time to time, entitled Unfair Discriminatory Practices.
The Developer shall not discriminate against any qualified persons with a disability who
is an employee or applicant for employ�nent and shall take affirmative action to ensure that sttch
quali�ied iildividuals are treated without regard to iheir disability in regard to jvb application
procedures; the hiring or advancement or discharge of employees; compensation; job traini�g;
and other terms a�ld coilditions, and privileges of en:�ploynlent pursuant to the Americans With
Disabilities Act af 1990 and Miruiesot�, rTuman Righls Act.
The Developer agrees that it will not discriminate in hiring, advancement, compensation,
discharge and any otl�er tenns and conditions �f employinent against any applicants for
employmen� or employees based upon race, gendcr, natianal origin, age, sexual o�ientation,
affectional preference and/or any ot3�er cl�aracteristie protected by federal, state or City statutes,
regulations or ordinances. The Developer agrees that it will comply with Title VII of the Civil
Rights AcC of 1964, the Equal Pay Act, Age Discrirnination in Einployment Act, Minnesata
Human Rights Act, Minnesota Age Discrimination Act, ail as amended, and other fedexal, state
ai�d City statutes and ordinances prohibiting discrimination in employment.
1361'103��4 14
i
TN WITNESS WHEREOF, the City has caused this Agreement to be duly executed in its
name and on its behali' and its seal to be hereunto dixly aff'txed, atld the Developer has caused this
Agreement to be duly executed in its name a»d on its behalf, on or as af the date fust above
written.
CITY OF PRiOR LAKE
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lt ,�ayor
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By.._.T
Its City M�`nag
{SEAL) s
STATE aF MINNESOTA )
)ss
COUI3TY OF SCOTT )
1
Th �oregoing instrument was ackn.owledged before me this � day of ���:'`t`�"1 ,
20�6-�- By JACK G. HAUGEN, Mayor and FRANK BOYLES, City Man ger of the CITY OF
PRIOR LAKE, a Minnesota municipal corporation, on behalf,,e� he corporation and
pursuant to the authority granted by its Ci.ty Council. ,
_�.
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Notary Pub1i
��'��'`�`''�'�'�
� �;�;.�.,�,� 1(ELIY MtiYER
; ��p ,:¢t � N6TAftY PUDLIC•4AIt�N�SOTA
"�Z� M
V�nM� .��-r .i.a�.�,��-'�
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This is a signature page to the Development A�reement by and between the City of Prior Lake
and March 6, 2042.
13Gk703v4 1 $
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EAGLE CREEK DEVELOPMENT LLC
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STATE OF MINNESdTA )
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COUNTY OF �LG'ti+ )
The foregoin inst ument r w�as acknowledged before me this �7� day of �'��.Z,t�� ,
20ZJL. , bY ��'L41 �����v�n���•�C. , the C.��(�1i'1G��2���.tz_ of F.AGLE CREEK i
DEV�LOPMENT LLC, a Minnesota Limited Liabilitq Company, on its behalf.
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Notary Public
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�� :�;;.,--� J::i.31,2005
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(;✓�".� . .. . _ . _ .. . .
This is a signature page to thc Dcvelopment Agreement Uy and between the City of Prior Lake
and Eagle Creek Development LLC dated March 6, 2Q02.
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1361703v4 1 6 �
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EXHIBIT A
Description of Development Property
Parcel Identification Nun�ber:
25-378-003-�
13G1703v4 A-1
EXHIBIT B
Compliance Certificate
The undersigned ot does hereby certify that as of the
datc of this Certif'icate not less than 24% of thc residential units in the housing project as defined
in the Development Agreement datcd as of March 6, 20U2 between the City of Prior Lake and
Bagle Creck Development LLC (the "Project") are occupied by individuals whose incozne is 50%
or less oI' area median gross incomc. The Devcloper certifies that maxizxzucn� grvss rent (which
includes all tenant paid utilities, except telephone) does not exceed 30% of 50% of the median
family incozne for Scoft County.
Dated this day of ,
EAGL� CREEK DEVELOFMENT LLC
By
Its �
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l3G ] 703v4 $-1 �
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EXHIBIT C
Fo�m of Note
$
No. R-
UNITED STATBS OF AMERICA
STATE OF MINNESOTA
COUNTY OF SCOTT
IN AND FOR THE CITY OF PRIOR LAKE
TAX INCREMENT REVENLTE NOTE
(EAGLE CREEK DEVELOPMENT LLC PR03EC� )
Tkle City of Prior L•ake, Nlinnesota (the "City"), hereby aclrnowledges itself to be
indebted ai�d, for �alue received, liereby promises to pay the amoutits hereinafler described (the
"Payment AYnounts") to Eagle Lalce Devel�pment LLC (the "Developer") or its registered
assi��s (the "Registered Owner"), but only in the nlani.ier, at the times, from the sources of
revenue, and to the extent hereinafter provided.
The principal a�noiuit of this Note shall equal fiom time to time the principal amount
stated above, as reduced to the extent that such principal installments shall have been paiti in
whole ar in part pursuant ta the terms hereof; pravided that the su�n of the pi7ncipal amount
listed above shall in no event exceed $S 16,246 as provided in that certain Development
Agreement, dated as of March 6, 2002, as the same inay be atnended from time to time (the
"Develupment Ag�eeYnent"), �y and between the City and the Developer. The unpaid principal
arnount hcreof sha11 bear interest fiom the date of this Note at the sui�ple non-compaunded rate
of seven percent (7°/a) per annum. Interest shall be coinputed an the basis of a 360 day year
consisting af twelve (12) 30-day �nanths. Interest aceruing �n the Note from tl�e date of issuance
of the Note to February 1, 2004 sliall be added to the princi�al of the Note.
The anlouiits due under this Note shall be payable on August l, 20U4, and on each
February i and Augusf 1 thereafter to and including February 1, 2024, or, if the first should not
be a Business Day (as defined in the Development Agreement} the next succecding Business
Day (the "Payinent Dates"). On each Payment Date the City shall pay by ch�ck or draft mailed
to the person that was the Re�istered �wner of this Note at the close of the last business day of
the City preceding such Payment Date an amount equa] to the sum of the Tax Inerements
(hereinaf�er defilied) received by the CiCy duriiYg the 6 month period preceding such Payment
Date.
Tlxe Payment Amounts due hareon shali he payable solely from 90% of the tax
incrernents (the "Taac Tncrenr�ents") derived fr•ona the Development Property within tl�e City's Tax
Increment Financing District No. 3-1 (the "Tax Increment District") within its Development
District No. 3 which are paid t� the City pursuant to ttie provisions of Minnesota Statutes,
Sections 469.174 t1u'ough 469.179, as the sa�ne may be amended or supplemented from time to
time (the "Tax Incrernent Act"). All such payinents shall be applied first to pay accraed interest
and then to reduce tlie principal balance of the Note. This Note shall terminate and be of no
13Gi703v4 C-1
fiuther force and effect followuig the last Payment Date defined above, on any date upon which
the City shall have tenninated the Development Agreement ui�der Section 4.2(b) fihereof or tlie
Deeeloper shall have terminated the Development Agrecment under Article V thereof, or on tlae
data that all principal interest payable hereunder shall have been paid in full, whichever occurs
carliest.
The City makes no representatioi3 or co�eixant, express or iinplied, that the Tax
Increments will be sufficient to pay, in whole or in part, the arnounts which are or may become
due and payable hereunder,
The City's payment obligations hereunder shall be further conditioned on the fact that the '
Developer has filed the Compiiance CerEzficates as required by Section 3.3 of the Agreement and
tliat no Event ot' Default under the Development Agreement shall have occurred and be
continuing at the tin�e payment is otherwise due hereunder, but such unpaid amounts shall
become payable if said Event of Dcfault shall thereafter have been cured; and, furthez, if
pursuant to the occurrence of an Event of Default under the Development Agreement the City �
elects to cancel and rescind Lhe Development Agreement, the City shall have no fiuther debt or ;
obligation under th�is Note whatsoever. Reference is hereby made to all of tl�e provisions of the
Development Agreement, including wi.tl�out fimitation 5ection 3.2 thereof, for a fuller statement
of tl�e rights and obligatioiis of the City to pay t11e principal of this Note, and said provisions are
hereby izaco��porated into this Note as though set out in full harein.
This Note is a special, limited revenue obligation and not a generai obligation of the City
and is payabLe by the City only fi•oin the sattrces and subject to the qualifications stated or
referenceci ixerein. This Note is nat a gexaeral obligation af the City of Prior Lake, Miniiesota,
and neither tlie full faith and credit iior the taxing powers of the City are pledged to the payment
of the principal of this Note and no p��operty or other asset of the City, sh.all and except the �
above-referenced Tax Increments, is or shall be a solu•ce of payment of the City's obligations ;
hereunder.
This Note is issued by ihe Cily in aid of financing a project pursuant to and in fult
confonnity wit�i the Constittttion aizd laws of the State of Miiu�esota, including the T� �
Incremexzt Act.
This Nota nZay be assigned only with the prior vv� consent of the City, In order to
assign the Nofe, the assi�mee shall surrencier tlie same to the City eitlier in exchange for a new
fully registered note or foi� transfer of this Note on the registration records for the Note
inaintained by the City. Each peirnitted assignee shall take this Note subject to the foregoing '
conditions and subject to alE provisions stated or referenced herein. �
IT IS ITEREBY C�RTIFIED AND RECITED ihat all acts, conditions, and things I
required by the Constitution and l.aws of the State of Minnesota to be done, to have happened,
and to be perfor�ned precedent to aud in the issuance of tlus Note have been done, have
happened, and have been performed in regular and due form, time, and manner as required by ,
law; and that this Note, togetUer with all othei• indebtedness of the City outstanding on the date
hereof and on the date of its actual issuance and delivery, does nnt cause the indebledness of the
City to cxceed any constitutional or statutory limitation thereon.
13G1703vQ C-2
f
IN WITNESS WHEREOF, City of Prior Lake, Minnesata, by its City Councit, has
caused this Note fo be executed by the manual signalures of its Mayor and City Manager and has
caused this Note to be issueci on , 200_.
City Managex Mayor
]361703v4 C-3
CERTIFICATION OF REGISTRATION
It is hereby certified that the foregoing Note was registered in the name of and
that, at the request of the Registered Owner of this Note, the undersigned has tl�is day registered
the Note in the narne of sitch Registered Ownar, as indicated in the registration blank below, on
the books ltept by the undexsigxted for such purposes.
NAME AND ADDRESS OF DATE OF SIGNATURE Or CITY �
REGISTERED OWNER REGISTRATION MANAGER
Eagle Creek Development, LLC , 200_ i
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]361703v4 C-4
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EXHIBIT D
Description of Site Ttnprovements
Site grading
Fvoting and foundations
Landscaping
Lighting for parking lot
SAC and WAC Charges
Sprinkler System
Public Utilities
Parking Facilities
Sti'cets and Sidewallcs
1361703v4 D-i
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- ' EXHIBTT C
Form o�Note i
$
No. R- r
_ UNTTED STATES OP AMERICA
STATE OF MINNESOTA
CpUNTY OF SCOTT
IN AND �OR THE CITY 4F PRIOR LAKE
TpX INCREMENT REVENU� NOTE
(EAGLE CREEK DEV�EL4PMENT LLC PRQ3ECT)
The City of Prior La.�e, Minnesota (tl:e "City"}, hereby acknowledges itself to be
indebted and, for value received, hereby promises to pay the amounts hereinafter described (the
"Payment Amounts") to Eagle T.aka Development LLC (the "Devcloper") or its re�istered
assigns (the "Registered Owner"), but only in the manner, at the times, from the sources of
revenue, and to the extent hereuaafter provided.
The principal amount of this Note shall equal from s sha 1 have pa d in
stated abovs, as reduced to fhe extent that snch pnnctpal tn
whole or in part pursuant to the tezms tzereaf; provided that the sum of the principal amount �
listed above sha11 in no event exceed $516,246 as provided in that cert.ain Developrnent
� Agreement, dated as of March 6, 2002, as the same may be amended from time to time (the
"Development Agreement"), by and between the City and the J�eveloper. The unpaid principal
amount hereof shalt bear interest from the date of #his Note at the simple non-cnmpounded rate
of seven percent (7%) per annum. Interest sha11 be computed on the basi� of a 3d0 day year
cansisting of twelve (12) 3D-day months. ��.�t������"��$�� �'�'�����������������
��;�t�:�'�teS��F�b�+i�'F�, ��F!�}i�i����f�1r��:�;�ti�;��e`��e�t�3�'�'���e<��i:�:
The amounts due under this Note shall be payable on Au�ust 1, ZOQ4, and on each ;
February 1 and August 1 thereafter to and including �ebruary I, 2424, or, if the first should not i
be a Business Day (as defined in the Development Agreement} the next succeeding Business
Day {the "Payment Dates"}. On each Payment Date th� City shall pa� by check or draft mailed
to the person that was the Registerad Ownar of this Note at the olose of the last businass day of
the City precedine such �aymezxt Date an amount equal to the sum of the Tax Increments
(hereinafter defined) received by the City during the 6 inonth period preceding such Payment
Date. � �
The Payment Amounts due herean shall be payable solely from 90% of the tax
increments (the "Tax Increments") derived from the Development Property vvithin the City's Ta�c j
Increment Financing Dismct Nn. 3-1 (the "Tax Tncrement District") within its Development 1
District No. 3 which are paid to the City pursuant to the provisions of Minnesota Statutes,
Sections 469.174 through 469.179, as the sam.e may be amended or supplemented fram time to
"�" time {the "Tax Incrernent Act"). All such payments shall be applied first tv pay accrued interest
and then to reduae the principal balance of the Nate. This Note shall terminate and be of no I
• ,
i3�i�o3�a � G1
further force and effect following the tast Payment D ement under �k.2(b) thereof or the
the City shall have tenninated the Dev�lopment Agre
Developer shall have terminated the D hereundex shal� a e b e pa d fuil, whicheve �occurs
date tliat all principal interest payabl
earliest.
The City makes no r�presentation or covenant, express or implied, that the Tax i
Increment"s will be sufficient to pay, in whole or in part, the amounts which are or may becorne '
due and payable hereunder.
The City's payment obligations hereunder shall be further conditioned on the fact that the
Developer l�as filed the Compli�nce Certif cates as required by Section 3.3 of the Agreement and
that no Event of Default urzder the Development Agreement shall have occurred and be I
continuing at d1e time payment is atherwise due hereunder, but such unpaid amounts shall ,
become payable if said Event of Def�ult shall t ult uncier he Dev opm nt Agree nt t�►e City
pursuant to the occurrence of an Event of t7. efa � City shall have no further debt or
elects to cancel and rescind the Development Agreement,
. obligation under this Note wk►atsoever. Reference is hereby made to ali of the provisions of the
Developrnent Agreement, including vvithout liznitation Section 3.2 thereof, for a fuller statement
of the ri�ts and obligations of the City to pay the principal of this Note, and said provisions are
herehy incorporated into this Note as though set out in full herein. i
This Note is a special, limited revenue obligation and not a genexal obligation of #he eity
.- and is payable by the City anly from the souroas and subject ta the � fPrior LakeSM nx►esota,
referenced herein. This Note is not a general obligation of the City
and neither the full faith and credit nor the taxing powers of the City are pledged to the payn�ent .
of the principal of this Note and no property or other asset of the Ciry, shail and except the
above-referenced Tax Increments, is or shall be a source of payment o£the City's obligations
hereunder.
This Note is issued by the City aws of the State ofMinn sota,�izx 1 ding he Tax
conformity with #he Canstttution and 1
Tncrement Act.
This Note may be assigned only with the prior wz�itten consent of the City. Tn order to
assign the Note, the assignee shall surrander the same to the City either in exchange for a new �
fully registered note or for transfer of this Note on fihe registratian records for the Note ,
maintained by the City. Each permitted assignee sha11 take this Nate subject to the foz ,
� conditions and subject to all provisions stated or referenced hereXn.
IT IS HEREBY CERTIFiBD !-�ND RECTTE ��esota to�be done� to�ha e ha pened, �
requrred by the Constitution and laws of the State of
and to be performed precedent to and in the issuance of this Note have been done, have
happened, and have been performed in regular and due form, time, and manner as required by ,
law; and that this Note, together with all other indebtedness of the City outstanding on the date
hereof and on the date of its actual issuance and delivery, daes not oause the indebtedness of the
City to exceed any constitutional or statutory limitation thezeon.
�s6i�oa�a C � 2 .
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lI� WITNESS WHERE4F, City of Prior Lake, Minnesota, by its City Council, has +
caused this Note ta be executed by the manual signatures of its Mayor and City Manager and has
caused this Note to be ' sued on f ►� 'r �, 2 ��.•
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City Mat► er ayo
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13617D3v4 C-3 , ,
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CERTIFICAT�UN OF R,EGISTRATION
�t is hereby certified that the foregoing Note was registexed in the name of and
that, at the request of the Registered Owner af this Note, the undersigned has this day registered
the Note in the nama ofsuch Registered �wner, as indicated in the registration blank beloW, on
the books�cept by the undersigned for such purposes.
N.AME AND ADDRESS �F DATE OF SIGNATUR� OF CITY
REGiSTERED OWNER__ REGISTRATION MANAGER
Eagle Creek Develapment, LLC > 2�4
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1361?03v4 (;-4
� !V1o�7ooz Pape 1 a11
♦
T1F DISTRICf' NO. 3-I � CERTTFIED
CREEKSIDE (EAGL� CREEK)
'� DEVELdPF.'R L1MtTED BEV$FVUE NUTE 7.00Q°/s
pERfD� BEGINNINCi '� Bep. Acaued Pdndpal Inkrest Fotal End PAYMENT DA7E
Yrs. Mlh. Yr. Da Balance Interest Pa nt Pa n! Pa menl ealance Yrs. Mth. Yr.
D.D 02-07 2002 0.00 O.OD 0.00 D.00 0.00 0.00 0.� aB.01 2002 �
D.o oe-OS 2�2 0.00 O.oO O.OD o.a0 0.00 O.oO o.0 02-01 2003 !
0.0 0.5-22 2003 0.00 O.W 0.00 0.00 0.00 0,00 0�0 DB�D1 2t103
0.0 15-uep 2003 �'� ' � ]3,551.4B 0.00 O.OD 0.00 529,797,46 D.0 02•Dt 2904
0.4 02•01 2004 629,797.a6 0.00 6,817,69 18,642.ef 27,3e0.5o 520,979.88 u.5 OB-01 2004
0.5 0@-01 20oA 520,879.88 0.00 8,126,20 18.234.30 27.380.50 511,653,88 1.0 02A1 2005
1.0 02A1 20D5 517,B53.66 D.00 9,445.62 17.814.88 27.360.60 507,408.07 1.5 08�01 2005
1,6 OB-01 2005 602.408.07 0.00 8.776?2 17,584,28 27,360.50 482.83/.85 2,U 62�01 2006
2,0 02�01 2006 492.831.85 6.00 1D,f16.38 17,2A2.11 27,360.90 482,513,47 2.5 68-07 20D8
2.5 oa-01 2006 a82,618.47 O.00 10,47z.53 �8,967.97 27.s60.5o a72,04o.9a a.o oz-0� zoo7
3.0 02•Oi 2007 072,O�O.B� 4.Q0 10,839.0T t6,621.43 27,360.6D 465.701.88 3.5 08.01 2UD7
7.5 QB•09 2007 48t20t.68 0.00 11.218.43 16,142.07 27,360.90 449,983.45 d.0 02-0� 2008
A.0 02.01 2008 A49.893,45 0.� 11,811,08 15,749.42 27,380.5D 438,372.38 4.6 OB�01 2008
4.6 0$•Df 2006 438,372.88 0.00 'l2,017.�7 1B,343.U3 27,36G.50 42b,�bt.91 6,0 D2•Ot 2pp9 �
B.0 02•01 2009 426�354,81 0.00 12,438.08 14,822.42 27,380,5D 41J,916.&4 6,5 08�Oi 2009
5.5 08-01 2004 d13,916.64 O,OC 12,873.41 �4,487,09 27,SB0.60 401,043.l3 6.0 82-01 2D10
6.0 U2Ai 201U 401,OA3.63 O,OD 13,323.90 14,036.82 27,360,60 387,759.46 b.6 08-0t 2010
@.5 OB-01 2010 387,719,48 D,00 t3,760.92 73,570.t8 27,380,60 3i3,929.14 7,0 42•D1 2017
7.0 02�41 20t1 373,929.14 O,OG 16,272,88 13,097.82 27,360.30 359,656,77 7.6 DB-01 2011
7.5 0@-01 20'li 358,856.17 D,00 Si,772.59 12,b87.87 27,380.50 344,883.64 9.0 02A7 2012 !
8.0 02-01 2012 344,883.84 0.00 S5.2B8,67 12,07D.83 27,36D.50 329,594.08 8.5 08-01 2Q12
8.5 OB-01 2012 329,644.06 O.OQ i6,B2d,7S 11.836.79 27.360.b0 513,769.37 9.D 02-01 2613
9.0 02-Ot 2015 319,765,37 0.00 46,378.57 t0,9Bt.93 27,38DS0 287,390.64 H.5 08-01 2013
•- 9.5 OB-01 2073 28I.990.81 O.�Q 16.957.82 70,4pB.8B 27,360.b0 284.436.D8 10.0 42-01 2014
10.0 02-01 20f4 280.438,Y9 0.0� 17.fi45.11 8,816.96 27,38D.50 262.893.88 10.5 06-01 2014
10.5 OB-O7 20f4 262,943.86 0.00 18,16922 8,201.28 27,380.fi0 244.734.64 11.D 62-01 2016
11.0 02-01 2016 244,734,64 � Q.00 18,784.79 8,5&5.71 27,380.50 225.93B.6B 11.5 08-01 2015
11.5 OB-01 2015 226,9J9,66 0.00 79.462.61 7,907,89 27.380.5D 2D6.467.25 12.0 62�01 2016
12.0 02-Ot 2016 206,487.26 0.00 20,133.46 7,227.05 27,390.60 199,353.61 12.6 OB-01 ZOt6
t2.6 OB-ot 2016 iB6,353.81 0.00 20,836.12 6,522,38 27,36D.50 f65,515.89 13.0 02�01 2017
t3.0 02-0! Z017 165,5'16.89 0.00 2t,567.45 5,793.65 27,3BO.fi0 f43,948.2b 13,5 Q6A7 20i7
t3.6 OB•Dt 2017 143,848.26 0.00 22.322.31 6,036.19 27,960.50 121,625.84 14.0 02-01 2078
14.0 02•Di 2018 121,825.94 O.OQ 23,70�.39 4,258.91 2T,380.50 98,5Y1.88 14.5 OB�01 2016
14,b 08�01 2618 98,fi22.35 O.OD 23,85222 3,44B3B 27,350.b0 74,810,44 75.0 02•pt 2019
15.0 02-01 2619 71,610.14 O.OD 24,749.16 2,811.36 27,960.50 49,86D.69 15.5 08-01 2019
15.5 68-01 2019 49�Bfi0.p9 O.OD 15.676,37 1,746,13 2T,900.60 24,245.83 19.0 02�01 2820
58.Q 02A7 2020 24,245.88 0.00 24,216,b3 84B.6D 24,D94.23 O.OU ,� _
18.5 0&6S 2020 0.00 0.00 0.90 0.00 D,OQ 0.00 17,0 02-01 2D21
17.0 02-01 202i 0�00 0.00 0.00 0.00 4,00 O.OD 17,5 08A1 2021 !
17,5 09-01 2021 0.00 O.DO 0.00 0.00 0.06 0.00 1B.Q 02-01 2022
t8.0 02-OS 2Q22 O,OD p,00 0.00 0.00 0.00 O.OU 16.5 08-01 2022
18.5 OB-01 2022 0,00 0.00 0.00 OAD 0.00 0.00 19.0 02-01 2023
19.0 02•DS 2023 D.Otl 0.00 O.OQ 0.00 O.QO D.00 18.5 OB•O1 2023
19.5 OB-Ot 2023 0�00 0.00 0�00 0.00 0.00 0�00 20,0 02-01 2024
2P.0 02-01 2024 O.OQ 0.00 0.00 0.00 0.00 0,00 20,6 OB-01 2024
20.5 OB•Of 2024 0.00 0.� D.O4 0.00 OAO D,90 2t,6 S12•O1 202b
13,$51.C6 526,79T.4fi 370,832.61 800830.b7
1h+WAd bY �� M07E Z002?S! I
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� - � EXH�.B�T C
� Foma of \jote
No. R- �
- UIVITED STA� ES OF ANIERICA
STAT� OF MINN�SOTA
COUNTY OF SCOTT
XN AND FOR TX�E CITY OF �PRIO�t LAK�
TA�.`� �;CRE�/IENT �VEI�iUE �tOTE
(EA,GS.E GREEK DEV�LOPMENT LLC PR03�CT)
Tr.e C•,.ty c:�'�rior I.���, ��; :nne5oi� �the "City"}, Lerehy ackno�vledges itself to be
inc�ebted and, fox value received, hereby promises to pay the amounts herei�after d�scribed {the
"Paymezzt .Amounts") tv �a�1� La�:e Developinent LLC (tlze "Developer") ox its registered
assiarzs {t,�e "12e�istered Owner"}, bL�t oz�ly ixl the rriazu'►er, at thc times, from the souxces of
revenue, and to tk�e extent hereix�after provided. � �
The princip�l amount of ttzis Noce shall ec�ual from tirr►e t4 time the p�irzcipa! amaunt �
staEed above, ns reduced to the exte�a.t that such principal installme��ts shall �Zave been �aid in
whoIe or in par� pursuai�t to the terms hereof; provided that the sum of the principal amount
tisted above shall in x�o evenE e�ceed �S l 6,246 as pxo��ided in that certain Deve�oprnent
�"� � Agreeme;nt, dated as of Vlarch G, ?U4�, as the same rrmay b� amEnded from time to tirz�e (the
"Development A�reement"), by and bchveeu the City and tlte �?eveto�er. The uz�pazd principal
amounc hexeof sizall bear interest from tlie date of this Note at the simple non-compoanded rate
of seven ��rcent (7%) per an.num. Itttexest shall be, computed on the basis of a 3b0 day year
consisting of t�velve (12) 30-day months. XnteresE accz�uing Qn the i�lote from tlxe date of issuance
of the Note tQ �ebTuary l, 2004 sha1� be added to the principal af the Note.
The amout�ts due under this Note slaa�l be payable on August 1, 2004, and on each
�'ebtuary I and Au�ust 1 ther.eaf�ez• ta and includin� Febnzary 1, 2fl24, or, if the �rst shot�ld not
be a Business Day l,as defiiied in the Devfllo�mc;nt Agreement) the ��ext succccding Business
Day (the "Payment Dafes"). On each Payment Date the City shall pa�+ by check or draft znailed
to th� persozz that was the ;Registered Owner of this Note at the close of thc last business day of .
the City precediztg such Payment Datc an araount equal to ihe surn of tIae Tax Yncrements" �
(hereinafter de�'�ned) r�ceived by the City dt�rin� the 6 inonth period preceding such Payxn.ent
l�ate. - .
Ths �ayment Amot.uzes due l�ereou sl�all b� payable solely fxom 90% of the tax
increm�nts (the "Tax Increnne�ts") de�.ved f.rom the DeveIopment Praperty ���tk�in the City's Tax
Increm�nt Financing Dist�'ict No. 3-1 (N�e "7'ax Incren�ent Disirict"} wit�tin its 17evelopment
District No. 3 wk�xch are �aid to ti�e City pursuant to the provisSoz�.s o£ vlinnesot� Statutes,
Sectzons 4{>9.174 chrough 469.179, as t}te same may be arnended or supplcmented from time to
time (tt�e "Tax Increment A.st"). All such payments shait be applied first to pay accrued interest
�� a�ad #�ezz to reduce the principal balance of the Note. �'his Note sl�all terminatt and be of no
t36t7b"svd C-i
2d lddST:OT bP,O� ti 'aEI�J 9�"flSLbb�S6 :'ON �tJGNd N011.�ftA�15WOJ 71taI�fHN�S�b1 : W02i�
� i
'��� 1 . �
I
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furth�r forcc a�d cffect following the laet Paymer�t llate de�ned abs�ve, c+n. aay clare u�on which !
, the City shall have tenninatzd tkze Dev�lopmcnt Agreeinent u�.der 5ection 4.2(b) thereof or the . �
�' DeveIoper sha�l lxave t�minated the Dc;vclo�met�t A�reemen.t unde�• Article V thereof, or an the i
date tl�at all pz�z�cipal interest }��yable l�ereiinder s(�all l�ave bee�a paid in full wl�iche�ver oceurs I
eaYliest. �
"ftte City �ztakes no rep�eseutativn or cove�a�zt, e.c�ress or impli�d, that the Tax �
Xr�crements will be sufficient to pay, in ��b.ole or in part, the arnounts �uhich are oz zrsay become
due and payabte hereunder. �
The City's payn��nt ob�igations l�t�rcunder shall be furtk�er conditioned on ttze fact that tk�e
Developer lias .f�led the Comptiance Certificates as requireti by Section 3.3 of the Agr�erzxent and 1
that no Event of J�efault undet� tl�e De:v�lopment Agrecme�zt shall have occurred and be i
continuzt�� ar thi; ticne payment �s othenvise ciue hereunder, but such unpaid amounts sba�l �
become �ayable if said Event of Defattic sl�all thereafter have been cttred; and, ftart�aer, if
pursuant to tl�e occurre��ce of an E��ent of Ueiault und�r tne Development A,greement the City
elects to cancel and rescind t�.e Develo�menc A�reemezit, the City shalt k�ave no further debt or
obligation under [his �tote wl�atsoever. Referez�ce is hereby made to al3 of the provisxons of the �
Development AQreement, in�lud�ng �vithout limztation Section 32 thereof, foz a fuller statemez�t �
o;Ethe rig�ts and obli�atioi�s o£the City to pay tl�e principal of chis Note, and said pxovxsions are �
hereby incorporated izato this Note as thou,ah� set out in f.�u11 herein. �
I
This No�e is a speciat, lin�itecl revenue obligation and ��ot a genexal obliaation of tl�e City i
and is payab�e by the City only fi•om the souxces �nd suhject to the quali�cations stated or �
�, ref�renced he�'eiu. Tliis Note is not a geueral obli�ation of the City o� �rior Lake, Minnesota, ;
an.d neither the full faith and credit nor the tAxing powers of ihe City are pledged to tbe payment i
of che principal o#'this Not� uid no pxaperiy�or other asset of the City, shall an.d except the � �
above-referenced Tax Increments, is or s�.all be a saurce o�'payment of the City`s obligations ;
hereunder. � �
'X`k�is �Iote is issued by the City in aid of �nancing a project pursuant to and in �u�� I.
conformity with the Coz�siitution and laws of the State o�f Minnesota, izzeluding the Tax � � i
Increment A,cE. i
This \�ote may bc assigned onSy tividi t�3e��zior wrxtten consent of thc: Ciry. Ft► order to j
assign the Note, the assiync:.� shall suzze�der tk�e same to thc City either in exchange for a new i
fully registered note ok f.or transfer of this Note on ti�e xegiscration records �or the Note '
maintained by tlae City. Each permitted assi�xaee shall talce t�iis Note subjeet to the forego�ng �
coz�d'ztions and subject to al� provisions stated ar'referenced k�erein. - I
�
IT TS HEREBY CERT�.FI.EA ANA RECITED that atl acts, coz�ditions, and things !
required by the Constitution a��d faws of t4ze State of Minnesota to be done, to have haP�ened, ;
and to be performed precedetu to and i�t tl�e issuance oi tliis �iote l�ave beez� done, have �
k�appened, azad i�ave l�een perfornied in regular and due form, tirne, and manner as required by !
la�v; and that dlis Note, together wich all other indebtedness af the City ou[standing o� the clate �
hcreof and on thc date of.its �ctu�t isstiance and detivery, does not cause t�e indebtedness of the ;
�
City to exceed any consticutional or stacucory limitation the�•eo��. '
{36f7U?r4 C-�
�d Wti9i :0i bC302 IZ 'a�b1 9£65L1�l��S6 : 'C�1� �tJOHd NG11��I2115�dOJ �IIJI�lHN3S�b! : 4lCf�l�
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TN WITr�SS WHER�OF, Czty of Prior Lake; ti-Iinnesota, hy its City Cau�cil has ;
� caused this Note to be executed by the manuxl's�giiatures of its Mayoz and City Vlana�Er and has ' ;
caused this NoYe to be 'ssued on >�� �� zQ(�,. �
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TJB DISTR[(;T NU. 3-1 - CERTTICI�D
CREEKSIDE (EAGLB C�R�F.K)
� s��i.�T; ';b�js+��9�i"5��4�� nFV��,orr.n i ,TA41T8A REVEf�IllE YOTE �.000�io
PERIpD BEGINNING Btg. ACCNCa Plitttip9l Mt!(PSI Td.et En6 PAYMEtlT DA7E �
Yrt. 1.:Q�. Y7. �3 � 6215f�GC fnlefCSi P mlY�t Pe'menl AO Mt D��7�KC Y(y. 1•1111. Yr.
0.0 02-Ot 2[42 0.00 0.00 O.OD 0.00 0.00 L.O� 0.0 09•01 2002
0.0 08.Qt 2002 0.00 0.00 OA� O.OD U.00 4.W 4.G 0'[-O} Y003 i
G,0 Ci•)2 2403 �:� O.OQ O.GO 0.00 O,W 0.00 O.W OA OE•Ot 2003 j
4,0 t.•Scp 20GJ ���:H;�3}�+,�,,,�` ,6 13.651.aG O,W 0,00 4.00 5c9,797.t6 G.0 Q2•Ot 2CO�
0.0 G2•U1 YOQS 5�4,797iE OAO S.Bi7S3 1B.Sa2.91 27.36d,50 5�0.979.89 0.5 C6•Ol [OOa I
0.5 03•Ot 2009 � 524,979,88 OA4 9.126.2o t6.23s.30 2r,350,50 ,�i,e55.GS �.0 o2•ot 2UO5 �
i
1.0 02-01 20P5 511�E5�.8B U.GG 9,aS5.62 1��61d.88 27.'.ni`0.56 �2�40@.0'� 4.5 U@•01 2005 i
1.5 96•01 2005 502,��9Af O.W 8,776.22 iT,.F8S.28 27,36D.80 �5'l,Bi7�1L5 2.0 02•Ot 2008 �
t.G Oi.Ui 2:1Gd S4's.631.85 4.00 1G,n9.38 77.24Y.15 27?80.50 4S2,St3.<7 2.5 OP 07 ?008
2.5 98-Of �iOS d82,5f3A7 0.00 1P,iT2 °3 18,8C7.87 27„',60SU �192,040.9i 3.0 , D2•Ot , 2007 ,•
3.0 02•Ot 2007 k72,000.60 OAO 50,839.0T 18.52t.i3 27,360«0 461,2A1,6C 3.5 OD•01 ' 2007
3.5 ti°r01 2GG7 46i,201.89 0.00 It.Zt8d3 16.f02•07 27,'v6Q.50 i4p,869.45 9.0 G2Nt 2000 '
�,o oz-01 2U08 sa9,98�.a5 0.90 it,8t1.09 i5,7a3.a2 27,950.50 i3S,S72.39 4.5 09•0� 2008
3.5 03•Oi 'L048 438,372.�@ O.GO 12,017AT f5,:A3.03 2),.'.b0�0 �26,15A�SS 6.0 MA7 2a02
5.0 02�J1 2t�G9 d28.35d.91 0.00 52,438.Od i<,922.a2 27,360.54 913,816,Ct 6.5 OB�01 2009
S.5 D8•01 2009 443,3f8.66 O.W t2.673a1 ti,�137.09 2�.360.50 401,Od3AJ 6.0 02�07 2U10 �
6.9 02•Ot 20f0 F01,OiJ.<3 0.00 i3,3L:.S9 74,036.�2 2�,5C-0.G4 887,776.a3 0.3 00•Ot 2070 �
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