Agenda - Council - 09/27/2011 - Special

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transfer the Development Property or any part thereof or interest therein; may not assign its rights or obligations under this Development Agreement; and may not assign the TIF Note, without the prior written approval of the City, which approval the City may grant, withhold or condition in the City's sole and absolute discretion. Section 11.2 Permitted Collateral Assignments. The City expressly approves Developer's granting of a Project Mortgage and Developer's collateral assignment of Developer's rights and obligations under this Development Agreement and the TIF Note to the holder of the Project Mortgage as additional security for the repayment of the Project Loan; provided the holder of the collateral assignment of Developer's rights and obligations under this Development Agreement and the TIF Note agrees, in the collateral assignment, that upon enforcement of the collateral assignment and the assignees acquisition of Developer's rights and obligations under either this Development Agreement, the TIF Note or both, the assignee will be subject to and liable for the performance of each of Developer's obligations under this Development Agreement. Section 11.3 Subordination of Development Agreement to Project Mortgage and Extension of Time to Cure. The City and the HRA will, upon the request of the holder of a Project Mortgage, execute and record a subordination agreement pursuant to which the City and the HRA agree that, upon a default by Developer under a Project Mortgage, the holder of the Project Mortgage may elect, in an instrument to be recorded in the Anoka County land records and delivered to the City and the HRA before the commencement of proceedings to foreclose the Project Mortgage, to either (1) treat this Development Agreement as being subordinate to the lien of the Project Mortgage such that the foreclosure of the Project Mortgage and the failure of any owner to redeem the Development Property from such foreclosure will terminate this Development Agreement and the TIF Note (but not the Assessment Agreement); or (2) to treat this Development Agreement as having priority over the Project Mortgage in which case this Development Agreement and the TIF Note will survive the foreclosure of the Project Mortgage and this Development Agreement will be binding upon the holder of the Sheriffs Certificate issued in conjunction with the foreclosure of the Project Mortgage. If the holder of the Project Mortgage fails to notify the City and the HRA of its election under this Section 11.3 on or before the commencement of foreclosure proceedings, the holder of the Project Mortgage shall be deemed to have elected to treat this Development Agreement as being subordinate to the lien of the Project Mortgage such that the foreclosure of the Project Mortgage and the failure of any owner to redeem the Development Property from such foreclosure will terminate this Development Agreement and the TIF Note (but not the Assessment Agreement). The City further agrees that if the holder of the Project Mortgage elects to treat this Development Agreement as having priority over the Project Mortgage and the City will, upon the completion of the foreclosure without redemption by Developer or any junior creditor, amend this Development Agreement to extend the time for the completion of the Minimum Improvements to a date 12 months following the expiration of all applicable redemption period. Section 11.4 Rental Restrictions. Developer covenants and agrees that at all times prior to the Termination Date, Developer will lease not less than % of the apartment units in the Project to tenants whose family income is equal to or less than % of the median family income as established by the United States Department of Housing and Urban Development for Anoka County. From and after the date Developer pays the HRA all amounts due and owning to 2695614v12 18