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2015-06-09 HRA Agenda PacketPLEASE TURN OFF CELL PHONES & PAGERS IN COUNCIL CHAMBERS. MOUND HOUSING & REDEVELOPMENT AUTHORITY REGULAR MEETING TUESDAY, JUNE % 2015 6:40 P.M. MOUND CITY COUNCIL CHAMBERS Page 1. Open the meeting 2. Action approving agenda, with any amendments 3. Action approving minutes: May 26, 2015 regular meeting 1 4. Action approving payment of claims 2 -4 5. Catherine Pausche, Director of Finance and Administration, requesting 5 -34 action on a Resolution Approving a Purchase Agreement Between the Mound Housing and Redevelopment Authority and Aeon 6. Adjourn MOUND HOUSING AND REDEVELOPMENT AUTHORITY May 26, 2015 The Mound Housing and Redevelopment Authority in and for the City of Mound, Minnesota, met in regular session on Tuesday, May 26, 2015, at 6:55 p.m. in the council chambers of the Centennial Building. Members present: Chair Mark Wegscheid, Heidi Gesch, Kelli Gillispie, Jennifer Peterson Members absent: Commissioner Ray Salazar Others present: City Manager Kandis Hanson, Director of Finance /Clerk/Treasurer Catherine Pausche, Community Development Director Sarah Smith, Director of Public Works Eric Hoversten Public Present: Katie Morford, James Reuper, Aaron Zimmerman, Katy Nordhagen, Rob Bergh, Josh Leddy 1. Open meeting Chair Mark Wegscheid called the meeting to order at 6:55 p.m 2. Approve agenda MOTION by Gesch, seconded by Gillispie, to approve the agenda. All voted in favor. Motion carried. 3. Approve minutes MOTION by Gesch, seconded by Gillispie, to approve the minutes of the May 12, 2015 regular meeting. All voted in favor. Motion carried. 4. Approve claims MOTION by Gesch, seconded by Gillispie, to approve the claims in the amount of $17,729.01. All voted in favor. Motion carried. 5. Adiourn MOTION by Gesch, seconded by Gillispie, to adjourn at 6:56 p.m. All voted in favor. Motion carried. Attest: Catherine Pausche, Clerk Chair Mark Wegscheid MOUND HRA CLAIMS 6-09-15 MEETING YEAR BATCH NAME 2015 060915 H RA -2- DOLLAR AMOUNT $8,724.75 Batch Name 060915HRA Payments Refer 1 ALL INC. CITY OF MOUND 06/03/153:12 PM Page 1 Payments Current Period: June 2015 User Dollar Amt Computer Dollar Amt $8,724.75 $6,724.75 $0.00 In Balance Cash Payment E 680 -49800 -240 Minor Equip & Small Too WHIRLPOOL REFRIGERATOR -WHITE IKM $543.00 $269.86 Invoice 06092015 5/20/2015 #102 AC /DC SMOKE ALARMS -12 IKM Invoice S1358989.001 5/21/2015 Invoice 9137614001 5/2112015 Wells Fargo HRA 10120 Total Transaction Date 5/1/2012 Wells Fargo HRA 10120 Total $543.00 Refer 5 CENTERPO/NT ENERGY(MINNEG _ REPAIR FIN TUBE RADIATION IN #111 & Cash Payment E 68049800 -383 Gas Utilities GAS SERVICE 4 -21 -15 THRU 5 -20 -15 IKM $2,966.00 Invoice 060915 -2 5/22/2015 BASE CLEAR BULBS FITTINGS BOILERS, HOT WATER SYSTEM Transaction Date 6/1/2015 Wells Fargo HRA 10120 Total $2,966.00 Refer 8 EMERGENCY LITE SERVICE CTR, _ Refer Cash Payment E 680- 49800 -220 Repair /Maint Supply BATTERIES- EMERGENCY FIRE WARNING $71.98 E 680 -49800 -304 Legal Fees HRA -LEGAL SVCS APRIL 2015 - RAD/ AEON SYSTEMS IN GARAGE @ IKM Invoice 89623 5/20/2015 Transaction Date 6/3/2015 Wells Fargo HRA 10120 Total $71.98 Refer 7 HD SUPPLY FACILITIES MAINTEN _ Transaction Date Cash Payment E 680 - 49800 -220 Repair /Maint Supply WHITE 1" HORIZONTAL BLIND- IKM $153.90 Invoice 9137657963 5122/2015 Cash Payment E 680 - 49800 -210 Operating Supplies 2 OUTPOST CIGARETTE RECEPTACLE, $269.86 Invoice 06092015 5/20/2015 AC /DC SMOKE ALARMS -12 IKM Transaction Date Invoice 9137614001 5/2112015 Wells Fargo HRA 10120 Total $2,376.25 Cash Payment E 680 - 49800 -220 Repair /Maint Supply RETURN VANITY GLASS PKG OF 4 - $68.55 Invoice 9137758514 5/28/2015 E 680 - 49800 -440 Other Contractual Servic REPAIR FIN TUBE RADIATION IN #111 & Cash Payment E 680 - 49800 -220 Repair /Maint Supply VANITY GLASS PKG OF 4; 60 W CANDLE $86.64 BASE CLEAR BULBS FITTINGS BOILERS, HOT WATER SYSTEM Invoice 9137054448 4/28/2015 Transaction Date 613/2015 Wells Fargo HRA 10120 Total $441.85 Refer 2 KENNEDYAND GRAVEN _ Cash Payment E 680 -49800 -304 Legal Fees HRA -LEGAL SVCS APRIL 2015 - RAD/ AEON $51.00 PROPOSAL- POTENTIAL USE OF TIF OR ABATEMENT Invoice 125929 5/26/2015 Transaction Date 6/1/2015 Wells Fargo HRA 10120 Total $51.00 Refer 3 MOUND, CITY OF Cash Payment E 680 -49800 -382 Water Utilities WATER SVC 4 -1 -15 THRU 5 -1 -15 IKM $2,376.25 Invoice 06092015 5/20/2015 Transaction Date 6/1/2015 Wells Fargo HRA 10120 Total $2,376.25 Refer 4 NS11 MECHANICAL CONTRACTING, _ Cash Payment E 680 - 49800 -440 Other Contractual Servic REPAIR FIN TUBE RADIATION IN #111 & $1,478.42 #405 IKM-REPLACE BALL VALVES & FITTINGS BOILERS, HOT WATER SYSTEM Invoice W34531 5/21/2015 Transaction Date 61112015 Wells Fargo HRA 10120 Total $1,478.42 Refer 9 OFFICE DEPOT - IKM Cash Payment E 680 - 49800 -200 Office Supplies COPY PAPER, ENVELOPES, PENS- IKM $61.82 Invoice 770546303001 5/14/2015 -3- CITY OF MOUND 06/03/15 3:12 PM Page 2 Payments Current Period: June 2015 Cash Payment E 680 -49800 -210 Operating Supplies BATH CLEANER, DEGREASER, SCOUR $221.18 PADS /SPONGES, OVEN /GRILL CLEANER, SCRUB BRUSH, DISINFECTANT, MULTIFOLD PAPER TOWELS, 2PLY TISSUE, KITCHEN TOWELS 3 PLY Invoice 337429039 5/18/2015 Cash Payment E 680 -49800 -210 Operating Supplies LOOP MOP- IKM $21.74 Invoice 331041954 2/26/2015 Cash Payment E 680 -49800 -210 Operating Supplies RETURN CREDIT- HAND TOWELS- - $41.17 KIMBERLY CLARK Invoice 331152876 2/27/2015 Transaction Date 6/3/2015 Wells Fargo HRA 10120 Total $201.75 Fund Summary 10120 Wells Fargo HRA 680 HRA PUBLIC HOUSING $8,724.75 $8,724.75 Pre- Written Check $0.00 Checks to be Generated by the Computer $8,724.75 Total $8,724.75 MEMORANDUM June 4, 2015 To: HRA Board Chair and Commissioners From: Catherine Pausche, Finance Director /Clerk /Treasurer / Re: Update on Partnership with Aeon and Corresponding Agreements At the April 28, 2015 HRA meeting, the board approved Aeon to partner with the HRA through the HUD Rental Assistance Demonstration process. Ultimately, this means the ownership and the associated HUD subsidy for Indian Knoll Manor will transfer to Aeon, a leading non - profit affordable housing developer. At the same meeting, the board appointed Chair Mark Wegscheid and Commissioner Ray Salazar to serve on an advisory committee that will meet with HRA Staff and representatives from Aeon to move the process forward. Commissioner Jennifer Peterson was appointed as the alternate. An introductory advisory meeting was held on Monday, May 4th. At that meeting, James Lenhoff, Aeon Director of Housing Development, introduced a timeline of milestones that needed to occur in the next four to six weeks in order to be able to apply for funding from the Minnesota Housing Finance Association (MHFA). Among those milestones was a meeting with the residents that occurred on May 12th and a physical conditions needs assessment (PCNA) that was conducted that same week. HRA and Common Bond staff also worked with Aeon to assemble the necessary financial and property information that was needed for the funding application. On May 28th, the advisory commission met to discuss three options for the property rehabilitation and possible expansion, one of which needed to be included with the funding application. Minutes from that meeting are attached to this memo Although everything is conceptual at this time, the funders require a firm commitment by the HRA to ultimately sell the property to Aeon. Therefore, the HRA Board is requested to approve a Purchase Agreement between the Housing and Redevelopment Authority of Mound, Minnesota, and Aeon, for the sale of Indian Knoll Manor at 2020 Commerce Boulevard. A draft of a Memorandum of Understanding (MOU) is also included in the packet because the purchase agreement references it, but this document is under review by both parties and will be approved at a future meeting. It is important to note that the HRA attorneys, Kennedy and Graven, have reviewed both documents. The purchase agreement is marked "DRAFT' because Staff will be bringing two language modifications to the meeting that are still under discussion. The essence of the intent is reflected in the draft document, but wording is still being tweaked. Staff is requesting the HRA Board approve the Purchase Agreement with Aeon, the final version of which will be presented and discussed at the meeting. Please feel free to forward any questions to me in advance of the meeting in order to ensure the HRA will be able to take action on the matter. -5- Minutes from May 28, 2015, 8:30 am - 10:15 am Meeting with HRA Advisory Committee and Aeon Staff Regarding Indian Knoll Manor Attendees: Kandis Hanson, Sarah Smith, Ray Salazar, Catherine Pausche, James Lehnhoff, Leslie Roering Summary of Discussion: James shared a summary of four financial scenarios, one with the existing number of units and the other three in various combinations of unit sizes, all of which added 16 additional units to the existing site. All four scenarios were created using the assumptions as required by the funding agency. The existing scenario operates at an increasing deficit in years 1 through 15. The three scenarios that added new units had modest surpluses, but essentially breaking even is the goal. James noted a maximum of 16 units will need to be added in order to qualify for additional funding. The primary funding source will be the 9% Low Income Housing Tax Credit (LIHTC) which is federal funding that is awarded by the Minnesota Housing Finance Agency (MHFA). 50 units will be the existing affordable units that they are today, although most efficiencies will be converted to 1 bedroom. The rehab will be completed in such a way that residents will not be required to vacate. The additional 16 would most likely be 3 bedroom affordable "workforce" housing subject to the <60% Average Median Income (AMI) as required by LIHTC program. The scenarios included adding on to the existing structure or detached townhomes. The deadline for the funding application is June 18th and will require one of the three scenarios, or a combination thereof, to be submitted. In addition, it will require a Purchase Agreement to be approved by the HRA. That agreement is currently being reviewed by the HRA Attorney, Julie Eddington, and will be on the June 9th HRA agenda. James noted that that is all that is needed leading up to the funding application. Thereafter, details will be sorted out, including: • Appraisal of Property - Purchase Agreement assumes $2.5M value, butlames hopes actual is higher and that a large percentage would be dedicated to the building for funding purposes. This will become the HRH's "donated capital" that will help fund investments in the project. • Discussion on the City granting a tax abatement for their portion of the property taxes. The property /HRA is currently exempt from property taxes, so this would defer any new tax revenue for a period of 15 years (estimated to be around $9K annually). This is opposed to a Housing TIF district which is harder to establish and more costly. • Developer agreement, plan reviews, etc. All of the financials and design sketches were returned to Aeon since they are just concepts at this point. Staff is to let James know if he needs to attend the June 9th HRA meeting and what, if anything, he needs to present. 02 MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF MOUND HOUSING AND REDEVLOPMENT AUTHORITY AND AEON This MEMORANDUM OF UNDERSTANDING ( "MOU ") is made by and between CITY OF MOUND HOUSING AND REDEVELOPMENT AUTHORITY ( "HRA ") and AEON to outline the parties' understanding concerning their joint efforts to establish a process for the anticipated sale of Indian Knoll Manor within the City of Mound RECITALS WHEREAS, the HRA owns and oversees operations of Indian Knoll Manor, a 50 unit multi- family rental apartment building located at 2020 Commerce Boulevard in the City of Mound (the "Property"); WHEREAS, Indian Knoll Manor is a 50 unit residential Public Housing Agency ( "PHA ") building; WHEREAS, the HRA issued a Request for Qualifications and Interest ( "RFQ ") seeking established, non - profit housing development entities that have the ability to perform the following as part of the sale of the Property: (1) Technical expertise to partner with the HRA in completing the Commitment to enter into a Housing Assistance Payment Contract (CHAP) conversion process; (2) Demonstration of ability to obtain new financing to fund improvements; and, (3) Ability to perform the aforementioned objectives coupled with the HRA's goals; WHERAS, the RFQ specifically identified the following goals of the HRA in connection with the sale of the Property: Maintain the property as a strong and vibrant affordable housing community Protect the existing rental price calculation as required by HUD Demonstrate that the equivalent of the market price will be reinvested into property improvements 4. Maintain Mound's residency priority WHEREAS, on April 20, 2015, Aeon submitted a Statement of Qualification for the purchase of Indian Knoll Manor in a response to the RFQ issued by the HRA; WHEREAS, after due consideration of all the applicants in response to the RFQ, the HRA identified Aeon as a qualified party of interest for purchasing the Property subject to parties establishing a process for the sale of the Property consistent with the expressed goals of the HRA; WHEREAS, the parties wish to enter into a MOU that outlines the goals and expectation of each of the parties during the process for the sale of the Property to Aeon. -7- MEMORANDUM OF UNDERSTANDING NOW THEREFORE, parties agree and understand the following: Subject to the termination provisions of paragraph seven, the parties will negotiate in good faith and exercise reasonable efforts to enter into a purchase agreement and any other related documents for the sale of the Property to Aeon, or an entity controlled by Aeon, pursuant to the expressed goals of the HRA in the RFQ. 2. The HRA and Aeon agree to the Roles and Responsibilities (Exhibit A) that set our mutual expectations for the sale of this Property. In particular, Aeon will provide technical expertise to the HRA in connection with the Rental Assistance Demonstration ( "RAD ") or other mutually agreeable process that results in the dissolution of Indian Knoll Manor's status in the PHA and transfer of ownership to Aeon. 3. The attached preliminary timeline (Exhibit B) provides a representation of the initial timeline through 2017. Both parties acknowledge that the timeline is subject to change pending funder and HUD approvals. 4. Led by Aeon, the parties will identify and pursue means of financing for purposes of completing the sale and eventual rehabilitation of the Property, which may include tax increment financing or tax abatement. The HRA agrees to contribute all of the sale proceeds, if any, back to the Property in order to facilitate the sale and rehabilitation. 5. Unless otherwise agreed in writing, each party to this MOU shall be responsible for their own costs, time, and materials expended in pursuing the parties' mutual interest in establishing a process for the eventual sale of the Property to Aeon. 6. The HRA and Aeon agree that by virtue of entering into this MOU they will have access to certain confidential information regarding the other party's operations related to this Property. The HRA and Aeon agree that they will not at any time disclose confidential information and /or material without the consent of that party unless such disclosure is authorized by this Memorandum of Understanding or required by law. The HRA and Aeon may disclose information to their attorneys and consultants provided that whoever receives the information agrees to maintain confidentiality. Unauthorized disclosure of confidential information shall be considered a material breach of MOU. 7. Aeon and the HRA will assign the appropriate staff to support the activities required as part of the planning, financing, and development process. The HRA agrees to provide access to the property and the building with at least two business days' notice and to cooperate with scheduling resident meetings and communicating information to residents. F-1 DI'AFT The HRA agrees to promptly respond to inquiries from Aeon in conjunction with the sale and financing of the Property as well as provide copies of all documentation related to the Property including, but not limited to, surveys, environmental documentation, financial statements, plans, and resident data. The HRA also agrees to include Aeon in all communications with HUD in relation to the RAID process. 10. Upon 10 (ten) days written notice to the other party, either Aeon or the HRA may terminate this MOU and cease all its efforts to establish and pursue a process for the eventual sale of the Property. Upon the termination of this MOU, neither party will be entitled to receive or permitted to seek compensation from the other party for any time, materials or moneys expended in connection with their efforts for establishing and pursuing a process for the sale of the Property. Each Party shall retain ownership of the materials they generated for this process. 11. MOU may be amended when approved by all parties in writing by designated representatives of the HRA and Aeon. This MOU shall automatically terminate upon completion of the sale to Aeon. This 12. Any notice authorized or required under this MOU shall be in writing and shall be sent by certified mail to the other party as follows: To Aeon: Aeon Attn: Gina Ciganik 901 N 3`d Street; Suite 150 Minneapolis, MN 55401 To the HRA: City of Mound HRA Attn: 2415 Wilshire Boulevard Mound, MN 55364 13. This MOU may be modified by mutual agreement of the patties in writing. 001 By: Its: President Dated: CITY OF MOUND HOUSING AND REDEVELOPMENT AUTHORITY By: Its: Executive Director Dated: BE TN�,,YpOG M� FIE 5 O'T� DRAFT MOU EXHIBIT A PAGE ! OF ! aG ®1 L. Homes for Generations May 4, 2015 Indian Knoll Manor Roles and Responsibilities — DRAFT In order to successfully complete the transition of Indian Knoll Manor from the City of Mound Housing and Redevelopment Authority (HRA) to Aeon, it is critical to form a partnership based on clear communication with defined roles and responsibilities. City of Mound HRA Aeon • Remain the primary contact with HUD, • Lead, develop, and implement the share information with Aeon, and include financing and construction package Aeon in communications with HUD • Support the HRA through the RAD • Support and provide information for due process diligence • Coordinate all due diligence for RAD, • Advocate on behalf of the project with financing, and construction potential financing and project partners • Facilitate communication with residents, city staff, and the community • Maintain open communication with Aeon on all aspects of the project Prepare and implement the project schedule Maintain open communication with the HRA on all aspects of the project 901 North 3" Street, Suite 150, Minneapolis, MN 5 -10. 612 -341 -3148 612 - 341 -4208F www.aeommn.org DRAFT MOU EXHIBIT B PAGE ! OF I Indian Knoll Manor -- Mound, MN DRAFT Schedule / Critical Milestones -- RAD Initiative 5/4/2015 -11- " `an*.6 *-lF DRAFT 6.4.15 PURCHASE AGREEMENT THIS PURCHASE AGREEMENT ( "Agreement ") is made effective as of , 2015 (the "Effective Date "), by and between The Housing and Redevelopment Authority of the City of Mound, Minnesota, a public body corporate and politic organized under the laws of the State of Minnesota ( "Seller "), and Aeon, a Minnesota nonprofit corporation (`Buyer "). In consideration of this Agreement, Seller and Buyer agree as follows: Sale of Propert y. Subject to the terms, conditions, representations and warranties set forth in this Agreement, Seller agrees to sell and assign to Buyer and Buyer agrees to purchase and accept from Seller, the following (collectively, the "Property"): 1.1. Title in fee simple to those certain tracts or parcels of land, and all improvements thereon, located at 2020 Commerce Boulevard, Mound, Minnesota, described as PIC Development MN074000001, the legal description of which shall be confirmed by the Escrow Agent (as hereinafter defined) (the "Land "), together with all hereditaments and appurtenances thereto (the "Real Property ") 1.2. All tangible personal property, fixtures, furnishings and equipment owned by Seller, located at or on the Real Property, and used in connection with the ownership, maintenance and operation thereof attached hereto and made a part hereof (the "Personalty "). 1.3. Seller's interest as lessor in all of the leases as described on the rent roll attached to this Agreement as Exhibit A (the "Leases ") and all accounts and security deposits or other deposits collected from tenants, together with any interest required by law to be paid ( "Deposits "). 1.4. Seller's interests in the following items, all of which relate to the Property: all service and maintenance contracts, equipment leases and other contracts (the "Contracts "); all permits, licenses, and trade names (the "Permits "); all warranties and guaranties relating to the Property (the "Warranties "); and all surveys, existing environmental reports, plans and specifications, business records, including management, leasing, real estate taxes, assessments, insurance, rents, maintenance, repairs, capital improvements and services and other records relating to the Property (the "Records "). 2. Purchase Price and Manner of Pa iii. The total purchase price (the "Purchase Price ") to be paid for the Property shall be the lesser of (i) Two Million Five Hundred Thousand and No /100 Dollars ($2,500,000.00) or (ii) the fair market value of the Property as determined by the Appraisal (as hereinafter defined). If Buyer does not conduct an appraisal of the Property prior to Closing, then the Purchase Price shall be $2,500,000. The Purchase Price shall be payable as provided in this Section 2. -12- R. ei, 2.1. Within five calendar days of the Effective Date, Buyer shall deposit $10,000.00 as earnest money (the "Earnest Money "), which Earnest Money shall be held by Commercial Partners Title, LLC, 200 South 6eh Street, Suite 1300, Minneapolis, Minnesota 55402 ( "Escrow Agent ") in accordance with the escrow receipt among Seller, Buyer and Escrow Agent attached hereto and made a part hereof (the "Escrow Receipt "). 2.2. The balance (i.e., the Purchase Price less the Earnest Money) in cash, certified check, cashier's check or by wire transfer of funds on the Closing Date. Seller agrees to use and apply all Purchase Price proceeds received hereunder for purposes of making one or more loans or grants to Buyer at Closing, on terms and conditions reasonably acceptable to Buyer and Seller (the "Project Assistance "). Buyer shall use the Project Assistance to rehabilitate and construct improvements upon the Property and for other costs related thereto. The provisions of this Section shall survive Closing. 3. Contingencies. Buyer shall have an inspection period (the "Inspection Period ") commencing on the Effective Date and ending at 11:59 p.m. Minneapolis time on June 30, 2016, to satisfy itself with certain matters described herein. The obligations of Buyer under this Agreement are contingent upon each of the following: 3.1. Seller Performance. Seller shall have fully performed each of its obligations under this Agreement. 3.2. Representations and Warranties. The representations and warranties of Seller contained in this Agreement must be true now and on the Closing Date as if made on the Closing Date. 3.3. Title. Title shall have been found acceptable, or been made acceptable, in accordance with the requirements and terms of Section 6 below. 3.4. Access and Infection. Seller shall have allowed Buyer, and Buyer's agents, immediate access to the Real Property without charge and at all reasonable times for the purpose of Buyer's investigation and testing the same. Seller shall make available to Buyer and Buyer's Agents without charge all plans and specifications, records, inventories, permits and correspondence in Seller's possession relating to Hazardous Substances affecting the Property. Buyer shall have been satisfied with the results of all tests and investigations performed by Buyer. Buyer shall be satisfied, in Buyer's sole discretion, with any Phase I Environmental Report and /or any and all additional environmental investigations and reports that Buyer deems appropriate. Buyer agrees to indemnify and hold Seller harmless from any damages, liabilities or claims, including, without limitation, reasonable attorneys' fees, caused by the negligence or wrongful act of Buyer, its employees, agents or contractors, in exercising its rights under this Paragraph 3.4 and to provide Seller with evidence that Buyer maintains reasonably adequate liability insurance including contractual liability -13- -2- ?,. endorsements insuring Buyer's potential liability hereunder. This obligation will survive Closing or termination of this Agreement. If Buyer does not purchase the Property from Seller, then Buyer agrees to repair any damage to the Property caused by such negligence or wrongful act and to return the Property substantially in the same condition as existed prior to the damage caused to the Property by Buyer's negligence or wrongful act. This obligation will survive Closing or termination of this Agreement. Notwithstanding any language herein to the contrary, Seller will have no right to make claims against Buyer hereunder unless the amount of any damages Seller incurs as described herein are in excess of an amount equal to the Earnest Money paid by Buyer under Section 2 hereof and retained by Seller if Buyer fails to close, less any out -of- pocket costs Seller actually incurs in connection with this transaction. 3.5. Document Delivery and Review. Buyer shall have determined, on or before the expiration of the Inspection Period, that it is satisfied with its review and analysis of the Leases, Contracts, Permits, Warranties, and Records. Seller shall deliver to Buyer copies of all such materials for review within twenty (20) days of the Effective Date. 3.6. Utilities. On or before the end of the Inspection Period, Buyer shall have been able to determine by written undertakings of or agreements with the relevant private and public entities that all necessary utilities (including, but not limited to, electricity, natural gas, municipal sanitary sewer, sewer and water) are located in the streets adjoining the Property, are available for use at the Property and are of adequate capacity to serve the Property for the use or uses contemplated by Buyer. 33. Zoning. On or before the end of the Inspection Period, Buyer shall have been able to determine that the Property is zoned to permit, without any special restriction or the requirement of obtaining a special use or conditional use permit or variance, the development and use of the Property for purposes of affordable housing and related project elements; or, if not so zoned or if any such permit or variance is necessary, Buyer is able to make application for, as applicable, such zoning or such permit or variance (in each case on terms and conditions and subject only to such restrictions or limitations as may be satisfactory to Buyer in its absolute discretion) for the development and use of the Property for purposes of affordable housing and related project elements on or before the end of the Inspection Period. Seller agrees to cooperate with Buyer with respect to any reasonable requests for rezoning, conditional use permits, variances, and the like. 3.8. Board of Directors Approval. The Board of Directors of Buyer have approved this Agreement, and the transactions contemplated by this Agreement, on or before the expiration of the Inspection Period. 3.9. Financing Approvals /Seller's Cooperation. Buyer shall have received, on or before the expiration of the Inspection Period, (i) commitments or proceeds of financing including, without limitation, the Project Assistance, and (ii) Seller's -14- -3- cooperation to implement Buyer's plans for and complete the purchase of the Property. 3.10. Appraisal. On or before the expiration of the Inspection Period, Buyer may, in its sole discretion, complete an appraisal of the Property (the "Appraisal "). The Appraisal, if any, shall demonstrate, in Buyer's sole discretion, the market value of the Property supports Buyer's proposed Purchase Price. 3.11. Final Walk Through. Buyer shall be satisfied, in Buyer's sole discretion, with the condition of the building which walk through must be scheduled no more than five (5) days prior to Closing. 3.12. CHAP Compliance. Seller shall have (i) complied with all of the requirements set forth in that certain letter (the "RAD Letter ") to Seller from the United States Department of Housing and Urban Development ( "HUD ") dated March 25, 2015 approving Seller's previously submitted application under the Rental Assistance Demonstration program for conversion (the "RAD Conversion ") of the Property from public housing to a form of project -based Section 8 Assistance under the United States Housing Act of 1937- (the "Act"), (ii) complied with all requirements contained in HUD's PIH Notice 2012 -32, Revision I (the "Notice ") and all subsequent revisions, including, without limitation, all applicable "CHAP Milestones" and deadlines described in Section 1.12 of the Notice, (iii) submitted such documents and certifications through the Rad Resource Desk (as such term is used in the RAD Letter) as is necessary for or beneficial to accomplishing the foregoing. 3.13. HUD Environmental Review. Notwithstanding any other provision of this Agreement, Buyer shall have no obligation to purchase the Property, and no transfer of title to the Buyer may occur, unless and until the responsible entity pursuant to 24 C.F.R. Part 58 (the "Responsible Entity "), has provided Buyer and/or Seller with a written notification that: (1) it has completed a federally required environmental review and its request for release of federal funds has been approved and, subject to any other contingencies in this Agreement, (a) the purchase may proceed, or (b) the purchase may proceed only if certain conditions to address issues in the environmental review shall be satisfied before or after the purchase of the Property; or (2) it has determined that the purchase is exempt from federal environmental review and a request for release of funds is not required. Responsible Entity shall use its best efforts to conclude the environmental review of the property expeditiously. 3.14. Government Approvals. Buyer shall have obtained, at its sole cost and expense, on or before the Closing Date, all other governmental approvals necessary in Buyer's judgment in order to make the use of the Property which Buyer intends, including but not limited to, state and local tax increment financing, bond allocations, and /or tax credit allocations. Seller shall cooperate in all reasonable respects with Buyer in obtaining such approvals, and shall execute such -15- -4- applications, permits and other documents as may be reasonably required in connection therewith. 3.15. Public Hearing. The Seller shall have complied with the requirements of Minnesota Statutes, Section 469.029. If any contingency has not been satisfied on or before the date specified above, or if no date is specified, the Closing Date, then this Agreement may be terminated by notice from Buyer to Seller. All the contingencies are specifically for the benefit of the Buyer, and the Buyer shall have the right to waive any contingency in Buyer's sole discretion. 4. Closing. The closing of the purchase and sale of the Property contemplated by this Agreement (the "Closing ") shall occur on or before September 30, 2016 (the "Closing Date''). Buyer will have the right, in its sole discretion, to extend the Closing Date for up to 2 additional 90 -day periods (each, a "Closing Date Extension ") by giving written notice to Seller prior to the Closing Date (as it may have been extended previously). For each Closing Date Extension, Buyer must pay to Seller an extension fee of $500.00 ( "Closing Date Extension Fee "). The Closing Date Extension Fees are nonrefundable, but the amounts paid will be credited or applied toward the Purchase Price upon Closing. The Closing shall take place at the office of Winthrop & Weinstine, P.A. in Minneapolis, Minnesota, or at such other place mutually agreed upon by the parties. Seller agrees to deliver possession of the Property to Buyer on the Closing Date. 4.1. Seller's Closing Deliveries. On the Closing Date, Seller shall execute and deliver to Buyer the following (collectively, "Seller's Closing Documents "), all in form and content reasonably satisfactory to Buyer: 4.1.1. Deed. A Warranty Deed conveying the Real Property to Buyer, free and clear of all encumbrances, except the Permitted Encumbrances hereafter defined. 4.1.2. Bill of Sale. A Warranty Bill of Sale conveying the Personalty to Buyer, free and clear of all encumbrances. 4.1.3. Assignment of Leases and Deposits. An Assignment of Leases and Deposits conveying with warranties the Leases, the Deposits, prepaid rents or collections and guarantees regarding the Leases to Buyer, free and clear of all encumbrances. 4.1.4. Assignment of Contracts, Permits, Warranties and Miscellaneous Documents. An Assignment of Contracts, Permits, Warranties and Miscellaneous Documents (including without limitation name rights) conveying Seller's interest to Buyer together with the consent of all parties having a right to consent to such Assignment. 4.1.5. Bring -Down Certificate. A certificate stating that all of the representations and warranties of Seller contained in this Agreement are true and correct on the Closing Date as made on the Closing Date. -16- -5- 4.1.6. Security posits and Prepaid Rents. All security deposits and prepaid rents under the Leases, if any, including valid transfers of any noncash securities or documents held for such purposes, together with notices to tenants and third parties of such transfers. 4.1.7. Original Documents. Original copies of the Leases, Contracts, Permits, Warranties, and Records, plus all plans and specifications for the Property in Seller's possession. 4.1.8. FIRPTA Affidavit. A non - foreign affidavit, properly executed, containing such information as is required by IRC Section 1445(b)(2) and its regulations. 4.1.9. IRS Forms. A Designation Agreement designating the "reporting person" for purposes of completing Internal Revenue Form 1099 and, if applicable, Internal Revenue Form 8594. 4.1.10. Well Certificate. A Certificate signed by Seller warranting that there are no "Wells" on the Property within the meaning of Minn. Stat. § 103I or if there are "Wells ", a Well Certificate in the form required by law. 4.1.11. Storage Tanks. If the Property contains or contained a storage tank, an affidavit with respect thereto, as required by Minn. Stat. § 116.48. 4.1.12. Individual Sewage Treatment Systems. tems. If the Property contains an individual sewage treatment system, a disclosure statement as required by Minn. Stat. § 115.55. 4.1.13. Certificate of Title. If title to the Property or any part thereof is registered, the owner's duplicate certificate of title. 4.1.14. Seller Certification. If Buyer, in its sole discretion, deems it necessary, a Seller's Certification, in the form attached hereto as Exhibit B, with such changes as my be required by Buyer's tax credit investor or its tax counsel to the extent required by Section 42 of the Internal Revenue Code. 4.1.15. CHAP Documents. All documents necessary to be executed by Seller in order to effectuate the RAD Conversion. 4.1.16. Project Assistance. All documents necessary to be executed by Seller in connection with the Project Assistance. 4.1.17. Other Documents. All other documents reasonably determined by Buyer or Title to be necessary to transfer the Property to Buyer free and clear of all encumbrances. 4.2. Buyer's Closing Deliveries. -17- -6- a 4.2.1. Purchase Price. On the Closing Date, Buyer will deliver to Seller the Seller Note and the funds representing the cash portion of the Purchase Price (minus the Earnest Money) in cash, certified check, cashier's check or by wire transfer of funds and the execution or delivery of any required Seller's financing documents. 4.2.2. CHAP Documents. All documents necessary to be executed by Buyer in order to effectuate the RAD Conversion. 4.2.3. Proiect Assistance. All documents necessary to be executed by Buyer or its affiliates in connection with the Project Assistance. 4.2.4. Other Documents. All other documents reasonably determined by Title to be necessary to transfer the Property to Buyer free and clear of all encumbrances. 5. Prorations. Seller and Buyer agree to the following prorations and allocation of costs regarding this Agreement: 5.1. Title Insurance and Closing Fee. Buyer will pay all costs of the Title Evidence, the fees charged by Escrow Agent for any escrow required regarding Buyer's Objections, all amounts due to the Broker, and all fees for recording all documents necessary to place record title in Seller's name and in the condition represented by Seller in this Agreement. Buyer shall pay for the cost of the Title Policy and all additional premiums required for the issuance of any mortgagee's Title Policy. Seller and Buyer will each pay one -half of any closing fee or charge imposed by any closing agent or by the title company. 5.2. Deed Tax. Seller shall pay all State Deed Tax payable in connection with this transaction. Buyer shall pay all Mortgage Registry Tax payable in connection with Buyer's financing, if any. 5.3. Real Estate Taxes and Special Assessments. All real estate taxes and special assessments payable in the years prior to the year in which the Closing occurs shall be paid by Seller. Real estate taxes payable in the year in which Closing occurs shall be pro -rated based upon a calendar year based upon the Closing Date. Seller shall pay the balance of all levied or pending special assessments against the Property at or prior to Closing. 5.4. Rents and Additional Tenants Amounts. All rents and other charges under the Leases will be prorated as of the Closing Date. Seller shall transfer to Buyer at the Closing Date and without additional charge all security deposits and interest thereon (including such interest by law or agreement to be paid to tenants) and prepaid rents. 5.5. Other Costs. All other operating costs of the Property shall be allocated between Seller and Buyer as of the Closing Date, so that Seller pays that part of operating -18- -7- costs payable before the Closing Date, and Buyer pays that part of operating costs payable from and after the Closing Date. 5.6. Attorneys' Fees. Each of the parties will pay its own attorneys' fees, except that a party defaulting under this Agreement or any Closing Document will pay the reasonable attorneys' fees and court costs incurred by the nondefaulting party to enforce its rights hereunder. 6. Title Examination. Title Examination will be conducted as follows: 6.1. Title Insurance Commitment and Abstract. Within one hundred twenty (120) days after the Effective Date of this Agreement, Buyer shall, at its expense, obtain commitment for the most current ALTA Owner's Policy of Title Insurance insuring fee simple title to the Real Property issued by the Title Company, together with copies of all documents referenced therein, in the amount of the Purchase Price ( "Title Commitment "). The Title Commitment shall commit the Title Company to insure fee simple title to the Real Property subject only to the Permitted Encumbrances (below defined) in accordance with the provisions set forth in this Section 6. The Title Commitment also shall provide for the following: (i) affirmatively insuring Buyer against any and all encroachments or mechanic's liens not of record, (ii) providing that the Title Company will increase its coverage at any time to reflect increase in the property values and /or improvements being made to the Property, upon payment to the Title Company of a standard policy premium for the amount of the increased insurance coverage; and (iii) providing that the Title Company shall issue policies to subsequent purchasers and /or mortgagees without exception for any encumbrances or defects in title which are not disclosed in the Title Commitment and which were existing on the date of the issuance of the Title Commitment. Seller shall promptly furnish to the Title Company all documentation and information required by it for the issuance of both the Title Commitment and the title insurance policy. 6.2. Survey. Within one hundred twenty (120) days of the Effective Date, Buyer at its sole expense, may obtain an updated survey of the Property (the "Survey" and, together with the Title Commitment, "Title Evidence ") certified to Buyer, Buyer's lenders, and the Title Company. 6.3. Buyer's Objections. Within one hundred twenty (120) days after Buyer's receipt of the last of the Title Evidence, Buyer may make written objections ( "Objections ") to the form and /or contents of the Title Evidence. Buyer shall also have the right to object to the Title Commitment from time to time after such one hundred twenty (120) day period if, by subsequent endorsement, the Title Commitment is amended. Buyer's failure to make Objections within such time periods will constitute a waiver of Objections. Any matter shown on such Title Evidence and not objected to by Buyer shall be a "Permitted Encumbrance" hereunder. Seller shall be allowed such period as Buyer specifies in its Objections (but which period shall not be less than thirty (30) days nor more than ninety (90) days) after receipt of the Objections to cure the Objections (the "Seller In tc Cure Period "), during which period the Closing Date and /or Inspection Period will be postponed, if necessary. Seller shall use its best efforts to correct any Objections. To the extent an Objection can be satisfied by the payment of money, Buyer shall have the right to apply a portion of the Purchase Price payable to Seller at the Closing to satisfaction of such Objection, and the amount so applied shall reduce the amount of the Purchase Price payable to Seller at the Closing. If the Objections are not cured within the Seller Cure Period, Buyer will have the option to do any of the following: 6.3.1. Terminate this Agreement by giving written notice thereof to Seller, and upon so doing the Earnest Money and the interest accrued and unpaid on the Earnest Money, if any shall be immediately returned to Buyer; or 6.3.2. Waive the uncured Objections and perform this Agreement according to its terms, provided, however, that there shall be a corresponding reduction in the Purchase Price not to exceed Ten Thousand and 00 /100 Dollars ($10,000.00) ( "Cure Funds "), in an amount necessary to cure the Objections post - Closing. In such instance the Cure Funds shall be held in escrow by Escrow Agent and all amounts used by Buyer to cure the Objection(s), to be evidenced by invoices, shall be released to Buyer after the objection has been removed. Any Cure Funds remaining in escrow after the Objections are removed and Buyer has been paid for the cost to cure the objection shall be released to Seller. Notwithstanding the foregoing, Seller shall not, except with the agreement of Buyer, be allowed any additional time beyond the otherwise scheduled Closing Date to cure any mortgage or other lien securing the payment of money, but shall pay and discharge the same of record at the Closing. 7. Operation Prior to Closing. During the period from the date of Seller's acceptance of this Agreement to the Closing Date (the "Executory Period "), Seller shall operate and maintain the Property in the ordinary course of business in accordance with prudent, reasonable business standards, including the maintenance of adequate liability insurance and insurance against loss by fire, windstorm and other hazards, casualties and contingencies, including vandalism and malicious mischief. Seller shall execute no contracts, leases (other than to tenants in the ordinary course of business not to exceed one (1) year in length) or other agreements regarding the Property during the Executory Period that are not terminable on or before the Closing Date, and Seller shall not remove any Personalty from the Property without, in each instance, the prior written consent of Buyer, which consent may be withheld by Buyer at its sole discretion. Seller shall not create, cause or permit the creation of any lien or encumbrance to attach to the Property between the Effective Date and the Closing Date unless Seller obtains a release thereof before the Closing Date or unless such lien is consented to in advance by Buyer. Seller shall cause to be paid, satisfied and released any monetary lien or encumbrance to attached to the Property on or before the Closing Date. -20- -9- 8. Representations and Warranties by Seller. Seller represents and warrants to Buyer as follows: 8.1. Title. Seller holds good and marketable title to the Property in fee simple absolute, subject to no liens, easements, restrictions or other encumbrances other than the Permitted Encumbrances. 8.2. Existence; Authority. Seller is duly organized, qualified and in good standing, and has the requisite power and authority to enter into and perform this Agreement and Seller's Closing Documents; such documents have been duly authorized by all necessary action; such documents are valid and binding obligations of Seller, and are enforceable in accordance with their terms. 8.3. Leases. Seller has made available to Buyer, or shall make available to Buyer within twenty (20) days of the Effective Date, to Buyer a correct and complete copy of each Lease and all its amendments. The information regarding the Leases contained in the attached Rent Roll is correct and complete as of the date of this Agreement. The Leases are in full force and neither Seller, nor any tenant, is in default under the Leases. There are no other leases or possessory rights of others regarding the Real Property other than those which will be disclosed by Seller to Buyer pursuant to Section 3.5 hereof. 8.4. Contracts. Seller has made available to Buyer, or shall make available to Buyer within twenty (20) business days of the Effective Date, a correct and complete copy of each of the Contracts, Permits, Warranties, and Records, and their respective amendments. 8.5. Operations. Seller has received no notice of actual or threatened cancellation or suspension of any utility services or certificate of occupancy for any portion of the Real Property. Seller has received no notice of actual or threatened special assessments or reassessments of the Real Property. The Property is, and to Seller's best knowledge has been, used in compliance with all governmental permits. All necessary permits have been obtained and are in full force and effect and no default exists thereunder. Seller is not in default concerning any of its obligations or liabilities regarding the Real Property. 8.6. Environmental Laws. To the best of Seller's knowledge, no toxic or hazardous substances or wastes, pollutants or contaminants (including, without limitation, asbestos, urea formaldehyde, the group of organic compounds known as polychlorinated biphenyls, petroleum products including gasoline, fuel oil, crude oil and various constituents of such products, and any hazardous substance as defined in any state, local or federal law, regulation, rule, policy or order relating to the protection of the environment) (collectively, "Hazardous Substance ") have been generated, treated, stored, transferred from, released or disposed of, or otherwise placed, deposited in or located on the Property, nor has any activity been undertaken on the Property that would cause or contribute to the Property becoming a treatment, storage or disposal facility within the meaning of, or -21- -10- otherwise bring the Property within the ambit of, any state, local or federal law, regulation, rule, policy or order relating to the protection of the environment. To the best of Seller's knowledge, there has been no discharge, release or threatened release of Hazardous Substances from the Property. To the best of Seller's knowledge, there are no Hazardous Substances or conditions in or on the Property that may support a claim or cause of action under any state, local or federal law, regulation, rule, policy or order relating to the protection of the environment. To the best of Seller's knowledge, the Property is not now, and to the best knowledge of Seller never has been, listed on any list of sites contaminated with Hazardous Substances, nor used as landfill, dump, disposal or storage site for Hazardous Substances. 8.7. Seller's Defaults. Seller is not in default concerning any of its obligations or liabilities regarding the Property. 8.8. FIRPTA. Seller is not a "foreign person ", "foreign partnership ", "foreign trust" or "foreign estate ", as those terms are defined in Section 1445 of the Internal Revenue Code. 8.9. Proceedings. There is no action, litigation, investigation, condemnation or proceeding of any kind pending or threatened against Seller or any portion of the Property. 8.10. Wells and Individual Sewage Treatment Systems. The Seller certifies and warrants that the Seller does not know of any "Wells" on the described Property within the meaning of Minn. Stat. § 103I or "Individual Sewage Treatment Systems" on the described Property within the meaning of Minn. Stat. § 115.55. This representation is intended to satisfy the requirements of those statutes. 8.11. Storage Tanks. No above ground or underground tanks are located in or about the Property, or have been located under, in or about the Property and have subsequently been removed or filled. To the extent storage tanks exist on or under the Real Property, such storage tanks have been disclosed to Buyer and are duly registered with all appropriate regulatory and governmental bodies, and otherwise are in compliance with applicable federal, state and local statutes, regulations, ordinances and other regulatory requirements. 8.12. Reports. Seller has delivered to Buyer or shall make available to Buyer within twenty (20) days of the Effective Date, copies of all environmental reports and studies relating to the Property which are in the possession of Seller. 8.13. No Conflict or Lien. Neither the execution or delivery of this Agreement nor the consummation of the transaction as contemplated herein will conflict with or result in a breach of any contract, license or undertaking to which Seller is a party or by which any of its property is bound, or constitute a default thereunder or, except as contemplated herein, result in the creation of any lien or encumbrance upon the Property. -22- -I1- $9 8.14. No Proceedings. No legal or administrative proceeding is threatened or pending against Seller which would adversely affect its right to convey the Property to Buyer as contemplated in this Agreement. The Seller and Buyer agree that the Seller's activities as set forth in Section 3.12 of this Agreement are not a violation of this Section 8.14. There are no condemnation or eminent domain proceedings pending or threatened with respect to the Real Property and there are no legal or administrative proceedings pending or threatened affecting the Real Property. 8.15. Methamphetamine. To the best of Seller's knowledge, no methamphetamine production has occurred on the Property. 8.16. 10 -Year Hold. All of the representations and warranties contained in the Seller's Certification, in the form attached hereto as Exhibit B, are true, correct and complete. 8.17. Additional Interests. There are no property interests or other improvements that are owned by Seller and which are necessary or useful for the operation of the Property that are not being conveyed pursuant to this Agreement. Seller will indemnify Buyer, its successors and assigns, against, and will hold Buyer, its successors and assigns, harmless from, any expenses or damages, including reasonable attorneys' fees, that Buyer incurs because of the breach of any of the above representations and warranties, whether such breach is discovered before or after Closing. Consummation of this Agreement by Buyer with knowledge of any such breach by Seller will not constitute a waiver or release by Buyer of any claims due to such breach. This Section 8 shall survive the Closing. 9. CHAP Compliance. Seller shall use its best efforts to (i) comply with all of the requirements set forth in the RAD Letter, (ii) comply with all requirements contained in Notice and all subsequent revisions, (iii) submit such documents and certifications through the Rad Resource Desk (as such term is used in the RAD Letter) as is necessary for or beneficial to accomplishing the foregoing and to ensure the success of the RAD Conversion. 10. Representations and Warranties of the Buyer. Buyer is duly organized, qualified and in good standing, and has the requisite power and authority to enter into and perform this Agreement and Buyer's Closing Documents; such documents have been (or will have been, on the date such documents are executed) duly authorized by all necessary action; that the execution, delivery, and performance by Buyer of such documents do no conflict with or result in violation of any judgment, order, or decree of any court or arbiter to which is Buyer is a party; such documents are valid and binding obligations of Buyer, and are enforceable in accordance with their terms. Buyer will indemnify Seller, its successors and assigns, against, and will hold Seller, its successors and assigns harmless from, any expenses or damages, including reasonable attorneys' fees, that Seller incurs because of the breach of any of the above representations and warranties, whether such breach is discovered before or after Closing. Each of the representations and warranties herein contained shall survive until twelve (12) month after the Closing Date and Seller -23- -12- must commence any action based on any breach of the representations or warranties on or before the first day of the twelfth month after the Closing Date. 11. Casualty; Condemnation. If all or any part of the Property is substantially damaged by fire, casualty, the elements or any other cause, Seller shall immediately give notice to Buyer, and Buyer shall have the right to terminate this Agreement and receive back all Earnest Money by giving notice within thirty (30) days after Seller's notice. If Buyer shall fail to give the notice, then the parties shall proceed to Closing, and Seller shall assign to Buyer all rights to insurance proceeds resulting from such event. If eminent domain proceedings are threatened or commenced against all or any part of the Property, Seller shall immediately give notice to Buyer, and Buyer shall have the right to terminate this Agreement and receive back all Earnest Money by giving notice within thirty (30) days after Seller's notice. If Buyer shall fail to give the notice, then the parties shall proceed to Closing, and Seller shall assign to Buyer all rights to appear in and receive any award from such proceedings. 12. Broker's Commission. Each of Seller and Buyer represents and warrants to the other party that it has not employed, retained, or otherwise utilized any broker or finder in connection with any of the transactions contemplated by this Agreement and no broker or person is entitled to any commission or finder's fees in connection with any of these transactions. Seller and Buyer shall indemnify and hold harmless one another against any breach of the foregoing representations and warranties, and against any loss, liability, damage, cost, claim, or expense incurred by reason of any brokerage commission or finder's fee alleged to be payable because of any act, omission, or statement of the indemnifying party. 13. Assignment. Seller may not assign this Agreement without Buyer's prior written consent, which may be withheld in Buyer's sole discretion. Notwithstanding the foregoing, Buyer may assign this Agreement without Seller's consent to an entity which is under the control of or operated under common control with Buyer. Seller agrees to execute any and all documents which may be required to effectuate Buyer's assignment of the Agreement in accordance with this Section 13. 14, Notices. Any notice required or permitted hereunder shall be given by personal delivery upon an authorized representative of a party hereto; or if mailed in a sealed wrapper by United States registered or certified mail, return receipt requested, postage prepaid; or if transmitted by facsimile copy followed by mailed notice; or if deposited cost paid with a nationally recognized, reputable overnight courier, properly addressed as follows: If to Buyer: Aeon 901 North 3rd Street #150 Minneapolis, MN 55401 Phone: 612 - 746 -0545 E -Mail: gciganik(a,aeommn.org Attention: Gina Ciganik -24- -13- e With Copy to: Winthrop & Weinstine, P.A. Suite 3500 225 South Sixth Street Minneapolis, Minnesota 55402 Attention: Jon Peterson, Esq. If to Seller: The Housing and Redevelopment Authority of the City of Mound, Minnesota 2415 Wilshire Blvd Mound, MN 55364 Phone: 952-472-0633 Attention: Finance Director With Copy to: Kennedy and Graven, Chartered 200 South 6a' Street Suite 470 Minneapolis, MN 55402 Attention: Mound HRA Attorney. Notices shall be deemed effective on the earlier of the date of receipt or the date of deposit, as aforesaid; provided, however, that if notice is given by deposit, the time for response to any notice by the other party shall commence to run one business day after any such deposit. Any party may change its address for the service of notice by giving notice of such change ten (10) days prior to the effective date of such change. 15. Remedies. If either Buyer or Seller defaults under this Agreement, the other party shall have the right to terminate this Agreement by giving written notice to the defaulting party. If Buyer fails to cure a Buyer default within thirty (30) days of the date of such notice, this Agreement will terminate, and upon such termination Seller will retain the Earnest Money as liquidated damages, time being of the essence of this Agreement. The termination of this Agreement and retention of the Earnest Money will be the sole remedy available to Seller for such default by Buyer, and Buyer will not be liable for damages or specific performance. If Seller breaches its covenants, representations or warranties or otherwise defaults under this Agreement and such breach or default is not cured within the thirty (30) day period set forth above, Buyer may seek specific performance of this Agreement (provided than an action therefor is commenced within six (6) months after such right arises) or terminate this Agreement and recover from Seller damages for nonperformance or specific performance of this Agreement. Without limiting the foregoing, Buyer shall recover as damages from Seller all of Buyer's out -of- pocket costs and fees, including without limitation, attorneys' fees, accountants' fees and other consultants' fees incurred by Buyer in preparing and negotiating this Agreement, preparing for the closing, obtaining financing commitments, investigating the status, title and condition of the Property, and other similar and reasonable costs and expenses or specific enforcement of this Agreement. 16. Survival. All of the terms of this Agreement and warranties and representations herein contained shall survive and be enforceable after the Closing. -25- -14- - 17. As Is. Buyer acknowledges that Buyer is purchasing the Property in reliance on the representations of Seller set forth in Section 8 and Buyer's inspection of the Property pursuant to Section 3 and on Buyer's judgment regarding the sufficiency of such inspections. Buyer is not relying on any written or oral representations or statements that Seller, Broker or any other agents of Seller have made except for the representations set forth in Section 8 of this Purchase Agreement. Subject to Buyer's right to terminate this Purchase Agreement as provided herein, Buyer is purchasing the Property in "AS IS" condition. 18. Restrictions. The following restrictions shall apply to the Property and shall survive the Closing: [UNDER REVIEW] 18.1. Buyer will maintain the Property as a strong and vibrant affordable housing community. 18.2. Buyer will protect the existing rental price calculations as required by HUD, CHAP COMPLIANCE, AND LIHTC regulations. [FROM MOU — AEON TO PROVIDE LANGUAGE] 19.3. Buyer demonstrate that the equivalent of the market price will be reinvested into property improvements [FROM MOU — HRA TO PROVIDE UPDATED LANGUAGE] 19.4. Buyer shall have a preference for tenants that are current residents of the City of Mound, however such preference shall not apply to the extent is does not conform to fair housing laws, regulations, and other applicable restrictions, and shall not apply to the extent that this restriction negatively interferes with Buyer's funding approvals, as determined by Buyer in its sole discretion. 20. Captions. Any headings or captions appearing in this Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. 21. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. 22. Amendment; Waiver. This Agreement may be amended only by written agreement approved by the Buyer and the Seller. No waiver of a right in one instance shall operate as a waiver of any other right or as waiver of such right in a later or separate instance. 23. Controlling Law. This Agreement has been made under the laws of the State of Minnesota, and such laws will control its interpretation and effect. 24. Exhibits. All Exhibits referred to in this Agreement are attached to and shall be considered a part of this Agreement. -26- -15- 25. Entire Agreement. This written Agreement constitutes the complete agreement between the parties and supersedes any and all other oral or written agreements, negotiations, understandings, and representations between the parties regarding the Property. There are no verbal or written side agreements that change this Agreement. [Signature Page to Follow] -27- -16- 103681748 Seller and Buyer have executed this Agreement as of the date first written above. SELLER: The Housing and Redevelopment Authority of the City of Mound, Minnesota By: Name: Its: Chair Bv: Name: Its: Executive Director t, Aeon, a Minnesota nonprofit corporation By: _ Name: Its: _28_ -17- t. DRAFT 6.4.15 ESCROW RECEIPT The undersigned, Commercial Partners Title, LLC ( "Escrow Agent "), acknowledges receipt of Ten Thousand and No/] 00 Dollars ($10,000.00) (the "Initial Deposit ") to be held by it pursuant to the Purchase Agreement to which this Escrow Receipt is attached. Additional deposits may be made with Escrow Agent (collectively with the Initial Deposit, the "Deposit ") pursuant to the Purchase Agreement. Escrow Agent agrees to hold the Deposit in accordance with the terms of the Purchase Agreement and disburse the same strictly in accordance with such terms. Escrow Agent shall invest the Deposit in such interest - bearing accounts or instruments as shall be approved by both Buyer and Seller. Interest shall accrue for the benefit of Buyer. Seller and Buyer represent that their respective Tax I.D. Numbers are as follows: Seller, Buyer, Escrow Agent shall have no responsibility for any decision concerning performance or effectiveness of the Purchase Agreement or to resolve any disputes concerning the Purchase Agreement. Escrow Agent shall be responsible only to act in accordance with the joint and mutual direction of both Seller and Buyer, or in lieu thereof, the direction of a court of competent jurisdiction. Seller and Buyer undertake to hold Escrow Agent harmless from all claims for damages arising out of this Escrow Receipt and do hereby agree to indemnify Escrow Agent for an costs and expenses in connection with this escrow, including court costs and attorneys' fees, except for Escrow Agent's failure to account for the funds held hereunder, or acting in conflict with the terms hereof. The fees and charges of the Escrow Agent shall be paid by Buyer. ESCROW AGENT: Commercial Partners Title, LLC By: Its: -29- b SELLER: The Housing and Redevelopment Authority of the City of Mound, Minnesota By: Name: Its: Chair By: Name: Its: Executive Director [Signatures continue on following page] -30- -2- [Signatures continued] BUYER: Aeon, a Minnesota nonprofit corporation C Its: -31- -3- DRAFT 6.4.15 EXHIBIT A (Leases) -32- DRAFT 6.4.15 SELLER'S CERTIFICATION The undersigned, on behalf of The Housing and Redevelopment Authority of the City of Mound, Minnesota, a public body corporate and politic organized under the laws of the State of Minnesota (the "Seller "), certifies that it is the owner of a certain real property situated at 2020 Commerce Boulevard, Minnesota (the "Property "). Seller has entered into that certain Purchase Agreement dated 2015 (as amended, the "Contract ") with Aeon, a Minnesota nonprofit corporation (the "Purchaser"). Purchaser intends to apply for acquisition low income housing tax credits under Section 42 of the Internal Revenue Code of 1986, as amended (the "Code ") and needs to verify that the Property will qualify for these tax credits. The date that title to the Property is being conveyed to Purchaser under the Contract is called the "Transfer Date." Accordingly, Seller hereby certifies to Purchaser that the following are true and correct: There has been a period of at least ten (10) years between the Transfer Date and the date that Seller acquired legal and beneficial ownership of each building at the Property and each building at the Property was placed in service. During the past ten (10) years (the "Required Ownership Period "), Seller has continuously held legal and beneficial title to the Property and no one other than Seller has had any legal or beneficial ownership interest in the Property. 3. After due inquiry, Seller has determined that no one related to or otherwise affiliated with the Seller is acquiring any interest in Purchaser that will result in such person having a greater than fifty percent (50 %) interest in Purchaser as of the Transfer Date or will have any direct or indirect record or beneficial ownership interest of greater than fifty percent (50 %) in Purchaser. 4. Each of the buildings at the Property will qualify as an "existing building" under Section 42(d)(2) of the Internal Revenue Code. 5. Seller as of the Transfer Date received all necessary authorizations, approvals and orders of and from all partners, regulatory officials or other parties to sell the Property to Purchaser and to execute all documents in connection with such sale. 6. At no time during the Required Ownership Period have more than 99% of the interests in Seller been transferred in any 12 month period. [remainder of page intentionally blank] -33- This Certification may be relied upon by Purchaser and its counsel, [tax credit investor names], their respective successors and assigns, and special tax counsel for [tax credit investor names] and /or its assigns. SELLER: The Housing and Redevelopment Authority of the City of Mound, Minnesota By: Name: Its: Chair By: Name: Its: Executive Director -34- -2-