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7. Reductions in Tax Capacity Rates. The taxable value of real property is <br />determined by multiplying the market value of the property by a tax capacity rate. Tax <br />capacity rates vary by certain categories of property; for example, the tax capacity rates for <br />residential homesteads are currently less than the tax capacity rates for commercial and <br />industrial property. In 2001 the Minnesota Legislature enacted property tax reform that <br />lowered various tax capacity rates to "compress" the difference between the tax capacity <br />rates applicable to residential homestead properties and commercial and industrial <br />properties. <br />8. Changes to Local Tax Rate. The local tax rate to be applied in the tax <br />increment financing district is the lower of the current local tax rate or the original local <br />tax rate for the tax increment financing district. In the event that the Current Local Tax <br />Rate is higher than the Original Local Tax Rate, then the "excess" or difference that comes <br />about after applying the lower Original Local Tax Rate instead of the Current Local Tax <br />Rate is considered "excess" tax increment and is distributed by Sherburne County to the <br />other taxing jurisdictions and such amount is not available to the City as tax increment. <br />9. Legislation. The Minnesota Legislature has frequently modified laws <br />affecting real property taxes, particularly as they relate to tax capacity rates and the overall <br />level of taxes as affected by state aid to municipalities. <br />10. Affordable Housing Declaration. The TIF District will cease to qualify as <br />a housing tax increment financing district and the TIF Note will terminate if the Project <br />ceases to be operated in accordance with the Declaration required by and defined in the <br />Development Agreement defined below. <br />F. The Note Holder acknowledges that the Note was issued as part of a TIF <br />Development Assistance Agreement between the City and the Developer dated June 4, 2018 <br />("Development Agreement"), and that the City has the right to suspend payments under this Note <br />and/or terminate the Note upon an Event of Default under the Development Agreement. <br />G. The Note Holder acknowledges that the City makes no representation about the tax <br />treatment of, or tax consequences from, the Note Holder's acquisition of the Note. <br />Dated as of the date first written above.. <br />Note Holder: <br />GCRE — JACKSON HILLS, LL <br />By: <br />1 41e�- <br />Its: <br />3 <br />