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of t, Elk River City of Elk River City Council Resolution 25-07 A Resolution of the City Council of the City of Elk River Approving a Release of Mortgage for The Heritage Millwork Project BE IT RESOLVED by the City Council (the "City Council") of the City of Elk River, Minnesota (the "City") as follows: Section 1. Recitals. 1.01. On August 19, 2024, the City conveyed certain property in the City (the "Development Property") to Jade Elk Properties LLC, a Minnesota limited liability company (the "Developer"), pursuant to a certain Purchase Agreement for the purposes of constructing an approximately 110,000 square foot industrial warehouse facility (the "Project") to be operated by Heritage Millwork, Inc., a Minnesota corporation (the "Company"). The City also executed a Development Assistance Agreement (the "Development Assistance Agreement"), by and among the City, the Developer, and the Company, pursuant to which the City has agreed to accept a purchase price note in the amount of $1,378,020.60 as payment (the "Purchase Price Note") for a portion of the purchase price for the Development Property. The Purchase Price Note grill be paid pursuant to its terms and the terms of the Development Assistance Agreement by tax increments derived from the Development Property and the improvements thereon. The Purchase Price Note is secured by a subordinate mortgage on the Project. 1.02. To finance the Project, Developer received (i) construction loans from First Bank Elk River, a Minnesota state banking corporation (the `Bank"), in the estimated principal amount of $17,554,000 (collectively, the "Bank Loan"), and (ii) a loan (the "SBA Loan" and, together with the Bank Loan, the `Bank Loans' from Twin Cities -Metro Certified Development Company, a Minnesota nonprofit corporation (the "SBA Lender" and, together with the Bank, the "Lenders"), to be assigned to the U.S. Small Business Administration, in an amount not to exceed $4,824,000. The City received a request to subordinate its Purchase Price Note to the Bank Loans. As a condition of subordinating the Purchase Price Note, the City required PLM Properties, LLC, a Minnesota limited liability company (the "Original Developer") to deliver a Mortgage in the amount of $500,000 (the "Mortgage") on certain property int the City where the Company's existing operations are located (the "Current Facility") to be released when the City delivers a certificate of occupancy for the Project. 1.03. The Developer is making considerable progress on constructing the Project and has requested that the City release the Mortgage on the property early so that the Current Facility can be sold. 1.04. The City Council has been presented with a form of a Release of Mortgage (the "Release") releasing the Mortgage early. 1.05. The City fords that the execution of the Release and the release of the Mortgage by the City and the performance of the City's obligations thereunder are in the best interest of the City and its residents and helps an existing business in the City maintain and expand its operations in the City. FIAT