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HomeMy WebLinkAbout23- Development Agreement - Freestone on Main, LLC - Fifth and Main DEVELOPMENT AGREEMENT (Fifth and Main)' This DEVELOPMENT AGREEMENT (this "Agreement") is dated as of October 24, 2023, by and between FREESTONE ON MAIN, LLC*(the "Developer") and the CITY OF BOZEMAN, MONTANA, 121 N. Rouse Ave., Bozeman, Montana 59771 (the"City"), The Developer and the City are each individually referred to herein as a"Party" and collectively as the "Parties." RECITALS: WHEREAS, under the provisions of Montana Code Annotated, Title 7, Chapter 15, Parts 42 and 43, as amended (the "Act"),the City is authorized to create urban renewal areas, prepare and adopt an urban renewal plan therefor and amendments thereto, undertake urban renewal projects therein, provide for the segregation and collection of tax increment with respect to property taxes collected in such areas, and apply tax increment revenues derived from projects undertaken within the urban renewal area to pay eligible costs; WHEREAS, pursuant to the Act and Ordinance No. 1685 adopted by the City Commission of the City (the "City Commission") on November 27, 2006, as amended and supplemented by Ordinance No. 1925, adopted by the City Commission on December 16, 2015 (as so amended and supplemented,the "M-URD Ordinance"), the City has created the Bozeman Midtown Urban Renewal District (the "M-URD") as an urban renewal district and has approved the Bozeman Midtown Urban Renewal Plan (the "M-URD Plan") as an urban renewal plan in accordance with the Act,which M-URD Plan provides for the segregation and collection of tax increment revenues with respect to the M-URD; WHEREAS, pursuant to the Act and Ordinance No. 1409, adopted by the City Commission on November 20, 1995, as amended and supplemented by Ordinance No. 1628, adopted by the City Commission on March 7, 2005 (as so amended and supplemented,the "DBID Ordinance"),the City has created the Downtown Bozeman Improvement District (the "DBID") as an urban renewal district and has approved the City of Bozeman Urban Renewal Plan (the "DBID Plan") as an urban renewal plan in accordance with the Act, which DBID Plan provides for the segregation and collection of tax increment revenues with respect to the DBID; and WHEREAS, the Developer proposes to undertake the construction of a new residential and mixed use project, expected to consist of the design, engineering and construction of approximately 121 residential units and 1,700 square feet of leasable space for office or retail use, together with related improvements (collectively, the"Development"), on land located in the DBID at 421, 411 and 407 West Main Street, Bozeman, Montana,which is legally described on Exhibit B hereto (the"Land"); WHEREAS, the Developer desires to construct improvements to the City's municipal sanitary sewer system that will benefit the Development as well as future development in the M- URD and DBID, including the removal and replacement of aged six-inch sanitary sewer main lines with new eight-inch sanitary sewer main in Mendenhall Street from 5t"Avenue to Grand Avenue and appurtenant work(the "Project"), which Project is located in the M-URD and the DBID; and WHEREAS, pursuant to Resolution No. 5548 adopted on October 24, 2023,the City Commission approved the Development as an urban renewal project under the Plan and the Act and authorized the use of tax increment revenue of the DBID and the M-URD (together, the "Districts")to reimburse the Developer for a portion of the costs of the Project in the maximum amount of$800,000, of which up to $464,000 is expected to come from the M-URD Tax Increment (as hereinafter defined) and up to $336,000 is expected to come from the DBID Tax Increment(as hereinafter defined), subject to the terms and conditions of this Agreement; and WHEREAS, the Parties desire to enter into this Agreement which sets forth the obligations and commitments of the Parties with respect to the Development and the Project. NOW, THEREFORE,the City and the Developer,pursuant to the Act, each in consideration of the representations, covenants and agreements of the other, as set forth herein, mutually represent, covenant and agree as follows: Section 1. Definitions; Rules of Interpretation; Exhibits. 1.1. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context clearly requires otherwise, the following terms have the meanings assigned to them, respectively: "Act" means Montana Code Annotated, Title 7, Chapter 15, Parts 42 and 43, as amended or supplemented. "Agreement" means this Development Agreement, dated as of October_, 2023, by and between the City and the Developer, as it may be amended or supplemented from time to time in accordance with the terms hereof. "City"means the City of Bozeman, Montana, or any successors to its functions under this Agreement. "City Commission" means the governing body of the City. "DBID" has the meaning given to it in the recitals hereof. "DBID Bond"has the meaning given to it in Section 2.1 hereof. "DBID Ordinance" has the meaning given to it in the recitals hereof. "DBID Tax Increment" means the amount received by the City pursuant to the Act from the extension of levies of Taxes (expressed in mills) against the incremental taxable value (as defined in the Act) of all Taxable Property located in the DBID, and shall include all payments in lieu of Taxes attributable to the incremental taxable value and all payments received by the City designated as replacement revenues for lost DBID Tax Increment. i E i 2 "Developer"means Freestone on Main, LLC, a Delaware limited liability company, and its successors and assigns in accordance with and as permitted under this Agreement. "Developer Certificate"means the certificate attached hereto as Exhibit E. "Development" has the meaning given to it in the recitals hereof. "Districts" means, collectively,the M-URD and the DBID. "DOR"means the State of Montana Department of Revenue. "Environmental Laws and Regulations" means and includes the Federal Comprehensive Environmental Compensation Response and Liability Act ("CERCLA" or the "Federal Superfund Act") as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. §§ 9601 et seq.; the Federal Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. §§ 6901 et-seq.;the Clean Water Act, 33 U.S.C. § 1321 et seq.; and the Clean Air Act, 42 U.S.C. §§ 7401 et seq., all as the same may be from time to time amended, and any other federal, state, county, municipal, local or other statute, code, law, ordinance, regulation, requirement or rule which may relate to or deal with human health or the environment including without limitation all land use, zoning, and stormwater control regulations as well as all regulations promulgated by a regulatory body pursuant to any statute, code, law, ordinance, regulation, requirement or rule. "Fiscal Year"means the period commencing on the first day of July of any year and ending on the last day of June of the next calendar year, or any other twelve-month period authorized by law and specified by the Commission as the City's fiscal year. "Indemnified Parties" has the meaning given to it in Section 7.1. "Land"has the meaning given to it in the recitals hereof. "Land Use Regulations" means all federal, state and local laws, rules, regulations, ordinances and plans relating to or governing the development or use of the Land or the Development. "Milestone" of"Milestones"has the meaning given in Section 3.4 hereof. "Milestone Date" or"Milestone Dates"has the meaning given in Section 3.4 hereof. "M-URD" has the meaning given to it in the recitals hereof. "M-URD Bonds" has the meaning given to it in Section 2.1 hereof. "M-URD Ordinance" has the meaning given to it in the recitals hereof. "M-URD Tax Increment" means the amount received by the City pursuant to the Act from the extension of levies of Taxes (expressed in mills) against the incremental taxable value (as defined in the Act) of all Taxable Property located in the M-URD, and shall include all 41 I I 3 E payments in lieu of Taxes attributable to the incremental taxable value and all payments received by the City designated as replacement revenues for lost M-URD Tax Increment. "Person"means any individual, corporation, limited liability company,partnership, limited liability partnership,joint venture, association,joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Project" has the meaning given to it in the recitals hereof. "State" means the State of Montana. "Tax Increment" means, collectively, DBID Tax Increment and M-URD Tax Increment. "Taxable Property"means all real and personal property subject to Taxes, including land, improvements and equipment. "Taxes" means all taxes levied on an ad valorem basis by any Taxing Body against the Taxable Property (exclusive of the six mill levy for university purposes levied by the State), and shall include all payments in lieu of taxes received by the City with respect to Taxable Property. "Taxing Body" means the City; the County of Gallatin, Montana; High School District No. 7 (Bozeman), Gallatin County,Montana; Elementary School District No. 7 (Bozeman), Gallatin County, Montana;the State; and any other political subdivision or governmental unit that levies or may hereafter levy or cause to be levied Taxes against property within the Districts. "Unavoidable Delay" means a delay resulting from a cause over which the Party required to perform does not have control and which cannot or could not have been avoided by the exercise of reasonable care, including but not limited to, acts of God, accidents, war, civil unrest, embargoes, strikes, unavailability of raw materials or manufactured goods, litigation,pandemics, epidemics, labor shortages, unusually inclement weather and the delays of the other Party or its contractors,agents or employees in the performance of their duties under or incident to this Agreement. 1.2. Rules of Interpretation. (a) The words"herein," "hereof' and words of similar import, without reference to any particular section or subdivision, refer to this Agreement as a whole rather than to any of its particular sections or subdivisions. (b) References to any particular section or subdivision hereof are to the section or subdivision of this Agreement in its original signed form, unless otherwise indicated. (c) The word "or" is not exclusive but is intended to contemplate or encompass one, more or all of the alternatives conjoined. 1.3. Exhibits. The following Exhibits are attached to and by reference made a part of this Agreement: 4 Exhibit A: Reserved Exhibit B: Legal Description of the Land Exhibit C: Reserved Exhibit D: Milestones Exhibit E: Form of Developer Certificate Exhibit F: Nondiscrimination and Equal Pay Affirmation Section 2. Representations. 2.1. City Representations. The City hereby represents as follows: (a) Pursuant to the Act, and after public hearings duly called and held, the City by the M-URD Ordinance has duly created the M-URD and by the DBID Ordinance has duly created the DBID. (b) Pursuant to Resolution No. 5548 of the City Commission,the City approved the use of Tax Increment, if available, to reimburse the Developer for costs of the Project in a total amount not to exceed $800,000, of which up to $336,000 is expected to come from DBID Tax Increment and up to $464,000 is expected to come from M- URD Tax Increment. Subject to the terms and conditions of this Agreement, the City intends to reimburse the Developer for the Project in an amount not to exceed $800,000. (c) The DOR has advised the City that, as of January 1, 2023, the base taxable value (as defined in the Act) of the DBID is $1,328,695 and the base taxable value (as defined in the Act) of the M-URD is $3,507,723. (d) The City Commission has duly authorized the execution and delivery of this Agreement. (e) The City has issued and there is outstanding its Tax Increment Urban Renewal Revenue Refunding Bond(Downtown Bozeman Improvement District), Series 2020 (the "DBID Bond"),payable from and secured by a first lien on DBID Tax Increment. The commitment of up to $336,000 in DBID Tax Increment pursuant to this Agreement is subordinate in all respects to the pledge of DBID Tax Increment to repayment of the DBID Bond. (f) The City has issued and there is outstanding its Tax Increment Urban Renewal Revenue Bonds (Bozeman Midtown Urban Renewal District), Series 2020 (the "M-URD Bond"), payable from and secured by a first lien on M-URD Tax Increment. The commitment of up to $464,000 in M-URD Tax Increment pursuant to this Agreement is subordinate in all respects to the pledge of M-URD Tax Increment to repayment of the M-URD Bond. I I 5 2.2. Developer Representations. The Developer hereby represents as follows: (a) The Developer is a Delaware limited liability company, duly formed, validly existing and in good standing under the laws of the State of Delaware and is duly qualified to do business in the State of Montana. The Developer has the power to enter into this Agreement and by all necessary corporate action has duly authorized the execution and delivery of this Agreement. (b) The Developer has or will have good marketable title to the Land, free and clear of all liens, encumbrances and defects except such as do not materially affect the value of the Land or materially interfere with the use made and proposed to be made of the Land by the Developer. (c) The Developer has the financial capability or commitments to complete the Development and the Project. (d) The Developer is not aware of any facts the existence of which would cause the Developer to be in violation in any material respect of any Environmental Laws and Regulations applicable to the Development or the Project. The Developer has not received from any local, state or federal official any notice or communication indicating that the activities of the Developer have been, may be or will be in violation of any Environmental Laws and Regulations applicable to the Development or the Project. (e) Neither the execution and delivery of this Agreement,the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions hereof is prohibited or limited by, conflicts with or results in a breach of the terms, conditions or provisions of the certificate of formation,partnership agreement or operating agreement of the Developer or any evidence of indebtedness, agreement or instrument of whatever nature to which the Developer is now a party or by which it is bound, or constitutes a default under any of the foregoing. (0 There is no action, suit, investigation or proceeding now pending or,to the knowledge of the Developer,threatened against or affecting the Developer or its business, operations,properties or condition (financial or otherwise) before or by any governmental department, commission, board, authority or agency, or any court, arbitrator, mediator or grand jury,that could, individually or in the aggregate, materially and adversely affect the ability of the Developer to complete the Development. (g) The Developer acknowledges and agrees that the sole source of funds for reimbursing the Developer under this Agreement is DBID Tax Increment and M-URD Tax Increment. The Developer acknowledges that the commitment of DBID Tax Increment pursuant to this Agreement is in all respects subordinate to the pledge of DBID Tax Increment to the DBID Bond, and that the commitment of M-URD Tax Increment pursuant to this Agreement is in all respects subordinate to the pledge of M-URD Tax Increment to the M-URD Bonds. The Developer further acknowledges and agrees the amount of DBID Tax Increment and M-URD Tax Increment is dependent upon a number of variables, including, without limitation, the taxable value of the Development,the 6 number of mills levied by Taxing Bodies, and then-prevailing state laws regarding computation of DBID Tax Increment and M-URD Tax Increment. The Developer agrees that if DBID Tax Increment in the amount of$336,000 and/or M-URD Tax Increment in the amount of$464,000 is not available to the City to reimburse the Developer,the City shall have no obligation to pay to the Developer the amount of reimbursement described in Section 4 and this Agreement shall terminate as described in Section 5.2(b). Section 3. Developer Undertakings. 3.1. Construction and Maintenance of Development. The Developer hereby agrees and commits to the City that it will diligently prosecute to completion the construction of the Development in accordance with this Agreement,the site plan submitted to the City and all applicable federal, State and local laws, rules, regulations, ordinances and plans relating to or governing the development or use of the Development, including applicable Land Use Regulations and Environmental Laws and Regulations. The Developer agrees and commits to the City that construction of the Development shall be substantially complete by August 31, 2025, subject to Unavoidable Delays. The total estimated costs of the Development are expected to be $51,700,000. The Developer has the financial capacity to complete the Development, and the Developer agrees to pay all costs thereof. At all times during the term of this Agreement,the Developer will operate and maintain,preserve and keep the Development or cause the Development to be operated, maintained, preserved and kept for the purposes for which it was constructed, and with the appurtenances and every part and parcel thereof, in good repair and condition. The Developer agrees to permit the City and any of its officers, employees or agents access to the Land for the purpose of inspection of all work being performed in connection with the Development; provided, however,that the City shall have no obligation to inspect such work. 3.2. Preparation,Review and Approval of Construction Plans. In connection with the Development,the Developer, at its sole expense, shall prepare and submit construction plans, drawings, and related documents for the Development to the appropriate City officials for architectural, engineering or land use review and written approval or permits. The Developer acknowledges that no review or approval by City officials hereunder may be in any way construed by the Developer to replace, override or be in lieu of any required review, inspection, or approval by the City Planning Division, or any other building construction official review or approvals required by any State laws or local ordinances or regulations. Nothing contained in this Agreement indicates or evidences that the City has approved or will approve the Development or any portion thereof. This Agreement does not affect or limit the City's regulatory powers with regard to the Development, including, without limitation, those relating to building permits or other permits or the payment of fees. As further described in Section 7.1, the City shall have no liability and the Developer shall hold the City harmless with respect to any increases in costs of the Development related to or arising out of delays resulting from the City's regulatory actions or approvals. 3.3. Construction of the Project; Warranty. The Developer shall acquire, install, construct or otherwise provide the Project. The Developer acknowledges and agrees that the City is not responsible for acquiring, installing, constructing or otherwise providing the Project. The estimated costs of the Project are $1,300,000. Upon acceptance by the City of improvements completed under this Agreement,the Developer must require its contractor to 7 provide the City a warranty on all improvements as required by 38.270.100, BMC, and section C.9 of the City of Bozeman Plans and Specifications Review Policy. 3.4. Milestones of the Development. Certain steps in the development of the Development are listed on Exhibit D attached hereto (collectively, the "Milestones"; each a "Milestone"), together with the dates by which the Developer is obligated to complete the Milestones (collectively, the "Milestone Dates"; each as it relates to a particular Milestone,the "Milestone Date"). The Developer acknowledges and agrees that the City in reserving or offering to make available Tax Increment to reimburse it for costs of the Project necessarily means that certain Tax Increment is not available to pay or reimburse other undertakings or costs for the benefit of the Districts and that the City reasonably expects additional DBID Tax Increment as a result of completion of the Development. The Developer acknowledges and agrees that conditioning the availability of Tax Increment to reimburse it for the Project on completion or satisfaction of the Milestones by the corresponding Milestone Dates is reasonable. If the Developer is unable to complete or satisfy a Milestone by the corresponding Milestone Date, the Developer shall make a formal written request to the Director of Economic Development, with appropriate supporting material, to extend the Milestone Date and, as appropriate, subsequent Milestone Dates. The Director of Economic Development may, in his or her sole discretion, (i) determine whether such extension is appropriate and, if so, fix a new and superseding Milestone Date and also adjust other subsequent Milestone Dates, along with any other terms or conditions, or (ii) refer the request to the City Commission to either approve the extension and adjust other Milestone Dates, as appropriate, or, in its sole discretion,terminate this Agreement, in which case the City will have no obligation to reimburse the Developer hereunder. 3.5. Independent Contractor Status/Labor Relations. The Developer understands that the City is obligated to follow certain laws with respect to the expenditure of public funds,which includes Tax Increment. The Parties agree the Developer and its contractors and subcontractors, including its engineers, and their employees and agents are independent contractors for purposes of this Agreement and are not to be considered employees of the City for any purpose. As such, neither the Developer nor any of its contractors and subcontractors are to be considered subject to the terms and provisions of the City's personnel policies and may not be considered a City employee for workers' compensation or any other purpose. The Developer and its contractors and subcontractors are not authorized to represent the City or otherwise bind the City in any dealings between them and any other party. With respect to the Project: The Developer must require its contractor to comply with the applicable requirements of the Workers' Compensation Act, Title 39, Chapter 71, M.C.A., and the Occupational Disease Act of Montana, Title 39, Chapter 71, M.C.A., and must ensure its contractor maintains workers' compensation coverage for all members and employees of contractor's business, except for those members who are exempted by law. I I 8 t The Developer must require its contractor furnish it with copies showing one of the following: (1) a binder for workers' compensation coverage by an insurer licensed and authorized to provide workers' compensation insurance in the State of Montana; or (2)proof of exemption from workers' compensation granted by law for independent contractors. The Developer must provide such evidence to the City upon the City's request. The Developer must require its contractor to give preference to the employment of bona fide Montana residents which means an individual who, at the time of employment and immediately prior to the time of employment, has lived in Montana in a manner and for a time that is sufficient to clearly justify the conclusion that the individual's past habitation in this state has been coupled with an intention to make this state the individual's home. The Developer must instruct its contractor that individuals who come to Montana solely in pursuit of a contract or an agreement to perform labor may not be considered to be bona fide Montana residents. The Developer must require its contractor to pay wages, fringe benefits, and expenses including travel allowances as set forth in the Montana Prevailing Wage Rate for either Highway Construction (2023) or Heavy Construction (2023), as may be applicable to the work performed, and as such wages are applicable to Gallatin County, Montana. The Parties agree the adopted wage schedules are incorporated herein. In addition,the Developer must require its contractor to pay all hourly wage employees on a weekly basis and to maintain payroll records during construction and for a period of three (3) years following acceptance of the Project by the City. Finally,the Developer must require that its contractor ensure that any person, firm or entity constructing any portion of the Project under this Agreement for which the Developer's contractor or any of its subcontractors is responsible, is paid the applicable standard prevailing rate of wages. In the event that, during construction of the Project, any labor problems or disputes of any type arise or materialize which in turn cause any services to cease for any period of time,the Developer must require its contractor to agree to take immediate steps, at its own expense and without expectation of reimbursement from City, to alleviate or resolve all such labor problems or disputes and that the steps contractor shall take are to be left to the discretion of contractor; provided, however, that the Developer must require the contractor to bear all costs of any related legal action. i The Developer must require its contractor to indemnify, defend, and hold the City E harmless from any and all claims, demands, costs, expenses, damages, and liabilities arising out of, resulting from, or occurring in connection with any labor problems or disputes or any delays or stoppages of work associated with such problems or disputes and for any claims regarding underpaid wages. 3.6. Utilities. The Developer shall not interfere with, or construct any improvements over, any public street or utility easement without the prior written approval of the City. All connections to public utility lines and facilities shall be subject to approval of the City and any private utility company involved. The Developer at its own expense shall replace any public facilities or utilities damaged during the Development by the Developer or its agents or by others f acting on behalf of or under their direction or control of the Developer. i r 9 i 3.7. Permits and Compliance With Laws. The Developer will obtain, in a timely manner, all required permits, licenses and approvals, and will meet all requirements of all local, state and federal laws, rules and regulations which must be obtained or met in connection with the acquisition and construction of the Development and the Project. Without limiting the foregoing,the Developer will request and seek to obtain from the City or other appropriate governmental authority all necessary land use, zoning, and building permits. The Developer must require its contractor to provide all notices, comply with all applicable laws, ordinances, rules, and regulations, obtain all necessary permits, licenses, including a City of Bozeman business license, and inspections from applicable governmental authorities, and pay all fees and charges in connection therewith. The Developer will comply in all material respects with all Environmental Laws and Regulations applicable to the construction, acquisition, and operation of the Development and the Project, will obtain any and all necessary environmental reviews, licenses or clearances under, and will comply in all material respects with, Environmental Laws and Regulations. In addition, the Developer shall require its contractor to comply fully with all applicable state and federal laws, regulations, and municipal ordinances including, but not limited to, all workers' compensation laws, all environmental laws including, but not limited to, the generation and disposal of hazardous waste,the Occupational Safety and Health Act (OSHA),the safety rules, codes, and provisions of the Montana Safety Act in Title 50, Chapter 71, MCA, all applicable City, County, and State building and electrical codes,the Americans with Disabilities Act, and all non-discrimination, affirmative action, and utilization of minority and small business statutes and regulations. 3.8. Easements. To the extent that the Project is to be located on the Land,the Developer hereby agrees to grant to the City and applicable utility companies from time to time such easements, rights-of-way and similar licenses in a form required by the City and as are reasonably necessary to permit the City to own, operate and maintain the Project. 3.9. Nondiscrimination and Equal Pay Affirmation. The Developer agrees to require its contractor(s)to be in compliance with the City's Nondiscrimination and Equal Pay Affirmation attached hereto as Exhibit F, as well as Title 49, Montana Code Annotated, regarding activities related to the Development and the Project. The Developer agrees that in its contracts with its contractors the Developer's contractor will be required to require its subcontractors to comply with the City's Nondiscrimination and Equal Pay Affirmation attached hereto as Exhibit F, as well as Title 49, Montana Code Annotated, regarding activities related to the Development and the Project. The Developer agrees to provide copies of all such contracts upon request by the City. 3.10. Performance and Payment Bonds. The Developer must require its contractor to provide performance, maintenance, and payment bonds to it for completion of the Project meeting all statutory requirements of the State of Montana, in form and substance and, without limitation, complying with the following specific requirements: (a) Require the contractor to faithfully perform all of the provisions of the contract between the Developer and the contractor. (b) Require the contractor to pay all laborers, mechanics, subcontractors, and material suppliers. 10 (c) Require the contractor to pay all persons who supply the contractor with provisions, provender, material, or supplies for performing the work. (d) Except as otherwise required by Montana law, the form and substance of such bond(s)must be satisfactory to the Developer and the City. (e) Bond(s) shall be executed by a responsible surety licensed in Montana and listed in the latest U.S. Dept. of Treasury Circular#570, with a Best's rating of no less than A/XII. Said bonds shall remain in effect through the warranty period for all Improvements, and until all of the contractor's obligations to the Developer are fulfilled. (f) The performance bond and the labor and material payment bond shall be in an amount equal to or exceeding one hundred percent (100%) of the contract amount entered into between the Developer and its contractor. (g) The Developer shall require the attorney-in-fact who executes the required bond(s) on behalf of the surety to affix thereto a certified and current copy of his or her power of attorney indicating the monetary limit of such power. (h) Every bond under this section must display the surety's bond number. A rider including the following provision shall be attached to each bond: Surety agrees that it is obligated under the bond(s) to any successor, grantee or assignee of the Developer and the City. (i) The City and the Developer must be named as obligees on the bonds. 0) The Developer must require its contractor to deliver the required bonds to it and the City prior to the commencement of any work on the Project. (k) Prior to acceptance of the Project,the Developer's contractor must post a maintenance bond with the City equal to 20%of the actual cost of the Project to correct any deficiencies in workmanship and/or materials which are found within the two-year warranty period. The City shall be named as an obligee on the bond. 3.11. Walkaway Provision. The Developer shall have the option, in its sole discretion and for any reason,to cease developing the Development and terminate this Agreement without penalty at any time prior to the Developer submitting a Developer Certificate (the"Walkaway Provision"). If the Developer exercises the Walkaway Provision,this Agreement shall immediately terminate and all rights and obligations of the Parties under this Agreement shall cease, except for those rights and obligations specifically identified in Section 8.3(b) in this Agreement as surviving termination. If the Developer exercises this Walkaway Provision, the Developer automatically waives any and all rights to reimbursement from the City under this Agreement. This Walkaway Provision shall not limit or prohibit any rights, claims or recourse that the City may have in connection with the Development or the Project. Section 4. City Undertakings. Subject to satisfaction of all conditions in Section 5 below, and solely from Tax Increment on hand,the City agrees to reimburse the Developer for the Project in an amount not to exceed $800,000, of which up to $336,000 is expected to come from 11 DBID Tax Increment and up to $464,000 is expected to come from M-URD Tax Increment. The Parties acknowledge and agree that, subject to the terms and conditions of this Agreement,the actual costs of the Project may exceed $800,000, but$800,000 is the maximum amount that the City will reimburse the Developer for the Project pursuant to this Agreement. Notwithstanding anything herein to the contrary,the maximum amount of DBID Tax Increment committed pursuant to this Agreement is $336,000 and the maximum amount of M-URD Tax Increment committed pursuant to this Agreement is $464,000. If DBID Tax Increment in the amount of $336,000 is not available,the City shall have no obligation hereunder to increase the amount of M-URD Tax Increment committed hereunder; if M-URD Tax Increment in the amount of $464,000 is not available, the City shall have no obligation hereunder to increase the amount of DBID Tax Increment committed hereunder. Section 5. Conditions and Process for Reimbursement. The City's reimbursement of the Developer for the Project as described in Section 4 shall be subject to the following conditions and in accordance with the following procedures: 5.1. Conditions to Reimbursement. (a) (i) The Developer must have completed or satisfied each of the Milestones by the applicable Milestone Date, as such date may have been extended pursuant to Section 3.4 hereof, (ii)the City must have issued a certificate of occupancy for the Development, (iii) the Project must have been completed in its entirety and the City must have delivered to the Developer written acceptance of the Project(which may be in the form of a Certificate of Completion or such other format as required by the City), and (iv) the Developer must demonstrate to the City's satisfaction, by a title report or other means acceptable to the City,that the Project is free of financial liens and any encumbrances affecting the Project must be acceptable to the City. (b) Reimbursement by the City for costs of the Project must be based on paid invoices for costs incurred by the Developer, its contractors and subcontractors or utility companies, which the Developer must supply to the City. The City may reject, in its sole discretion, any invoice related to the Project. The City will notify the Developer of any rejected invoice and the reason it was rejected. (c) The Parties agree that the City will have no obligation to reimburse any of the costs of the Project unless at the time the Developer submits its Developer Certificate (i) all of the Developer's representations as set forth in Section 2.2 are true and correct, (ii) the Developer is not in breach of any covenant or undertaking as set forth in Section 3, and (iii) there shall be adequate Tax Increment on hand to pay the amount of the reimbursement and satisfy all other financial obligations related to the Districts. If any of the above conditions are not satisfied in the determination of the City,the City shall have no obligation to reimburse the Developer for the costs of the Project and the City's determination to refrain from reimbursing, or its inability to reimburse, any of the Project shall not be or result in a default under this Agreement. 5.2. Process for Payment or Reimbursement. 12 (a) After receiving a certificate of occupancy for the Development,the Developer shall provide to the City a signed Developer Certificate substantially in the form attached as Exhibit E hereto and acceptable to the City, accompanied by the invoices and lien waivers from the contractors or subcontractors performing or that have performed the work to be reimbursed. In addition, the Developer agrees to provide to the City any additional information reasonably requested by the City for the City to determine whether the Developer's request for reimbursement complies with this Agreement. (b) By the date that is 30 days after the submission by the Developer of a complete and acceptable Developer Certificate, as determined by the City,the City, subject to the terms and conditions of this Agreement, shall reimburse the Developer for the Project in an amount not to exceed $800,000, of which up to $336,000 is expected to be paid from DBID Tax Increment and up to $464,000 is expected to be paid from M- URD Tax Increment. However, if the City shall earlier determine that the Tax Increment is not sufficient to reimburse the Developer for the Project, then the City shall so inform the Developer in writing and this Agreement shall thereupon terminate. Section 6. Sources of Repayment; Covenants to Pay Taxes. 6.1. Taxes. The Developer shall pay or cause to be paid when due and prior to the imposition of penalty all Taxes and all installments of any special assessments payable with respect to the Land and the Development and any improvements thereto or extension thereof. 6.2. Maintenance of Land and Development. The Developer agrees to use its commercially reasonable best efforts to maintain and operate the Land and the Development so as to be able at all times to pay promptly and when due all property taxes levied with respect to the Land and the Development. 6.3. Injunction; Specific Performance. The Parties agree that, in the event of a breach of this Section 6 by the Developer or its successors or assigns, the City would suffer irreparable harm. Therefore, in the event the Developer or its successors or assigns fails to comply with the provisions of this Section 6, the Developer agrees that the City may pursue any remedy at law or in equity, including the remedies of injunction and specific performance. Section 7. Indemnification and Insurance. (a) The Developer releases the City and all City Commission members, board members, officers, agents, servants and employees of the City (the "Indemnified Parties") from, and covenants and agrees that the Indemnified Parties shall not be liable for, and agrees to indemnify, defend and hold harmless the Indemnified Parties against, any loss, damage, cost(including reasonable attorneys' fees), claim, demand, suit, action or other proceeding whatsoever(i) arising or purportedly arising out of, or resulting or purportedly resulting from,the acquisition and construction of the Development or the Project, any violation by the Developer of any agreement, condition or covenant of this Agreement, the ownership, maintenance and operation of the Development, or the presence on any portion of the Land of any dangerous, toxic or hazardous pollutants, 13 contaminants, chemicals,waste, materials or substances; or(ii) which is proximately caused by the Developer or its officers, agents, contractors, consultants or employees. (b) The Developer agrees to require in any contract it enters into in fulfillment of its obligations under this Agreement that it will, to the fullest extent permitted by law, require its contractors to agree in such contracts that the contractor does release, defend, indemnify, and hold harmless the Indemnified Parties from and against any and all claims, demands, actions, fees and costs (including attorney's fees and the costs and fees of and expert witness and consultants), losses, expenses, liabilities (including liability where activity is inherently or intrinsically dangerous) or damages of whatever kind or nature connected therewith and without limit and without regard to the cause or causes thereof or the negligence of any party or parties that may be asserted against, recovered from or suffered by the Indemnified Patties occasioned by, growing or arising out of or resulting from or in any way related to: (i)the negligent,reckless, or intentional misconduct of the contractor; (ii) any negligent, reckless, or intentional misconduct of any of the contractor's agents including its subcontractors. Such obligations shall not be construed to negate, abridge, or reduce other rights or obligations of indemnity that would otherwise exist. The indemnification obligations of this Section must not be construed to negate, abridge, or reduce any common-law or statutory rights of the indemnitee(s)which would otherwise exist as to such indemnitee(s). The indemnity under this Section the Developer must require of its contractor shall be without regard to and without any right to contribution from any insurance maintained by any Indemnified Party. Should any indemnitee described herein be required to bring an action against the Developer's contractors or engineers to assert its right to defense or indemnification under this Agreement or under the Developer's contractor's or engineer's applicable insurance policies required below the indemnitee shall be entitled to recover reasonable costs and attorney fees incurred in asserting its right to indemnification or defense but only if a court of competent jurisdiction determines the Developer's contractor(s) or engineer(s) was obligated to defend the claim(s) or was obligated to indemnify the indemnitee for a claim(s) or any portion(s) thereof. In the event of an action filed against City resulting from the City's performance under this Agreement, the City may elect to represent itself and incur all costs and expenses of suit. The Developer must also require its contractors and subcontractors and engineers to waive any and all claims and recourse against the City or its officers, agents or employees, including the right of contribution for loss or damage to person or property arising from, growing out of, or in any way connected with or incident to the Project except"responsibility for his own fraud, for willful injury to the person or property of another, or for violation of law, whether willful or negligent" as per 28-2-702, MCA. The obligations contained in this Section 7 shall survive termination of this Agreement. 14 (c) In addition to and independent from the above, the Developer shall require its contractor(s) and engineer(s) at the contractor(s)'s and engineer(s)'s expense, to secure insurance coverage through an insurance company or companies duly licensed and authorized to conduct insurance business in Montana which insures the liabilities and obligations specifically assumed by the Developer's contractor(s) or engineer(s) in this Section. The insurance coverage shall not contain any exclusion for liabilities specifically assumed by the contractor(s) or engineers) retained by the Developer to perform its obligations under this Agreement and as such liabilities and obligations are included in subsection (a) of this Section. The insurance shall cover and apply to all claims, demands, suits, damages, losses, and expenses that may be asserted or claimed against, recovered from, or suffered by the City without limit and without regard to the cause therefore and which is acceptable to the City and the Developer must cause to be furnished to the City an accompanying certificate of insurance and accompanying endorsements demonstrating such insurance is in place in amounts not less than as follows: • Workers' Compensation—statutory; • Employers' Liability - $1,000,000 per occurrence; $2,000,000 annual aggregate; • Commercial General Liability - $2,000,000 per occurrence; $4,000,000 annual aggregate; • Products Completed Operations - $5,000,000; • Automobile Liability - $1,000,000 property damage/bodily injury per accident; and • Professional Liability - $1,000,000 per claim; $2,000,000 annual aggregate. In addition to the above,the Developer must cause its contractor to purchase and maintain insurance in the amount of the full replacement cost of the Project. This insurance must: • Include the interests of the City, the Developer, and the Developer's contractor, engineers, and subcontractors each of whom is deemed to have an insurable interest and must be listed as an insured or additional insured; • Be written on a Builder's Risk"all risk" or open peril or special causes of loss policy form that shall at least include insurance for physical loss and damage to the Project, temporary buildings, false work and materials and equipment in transit and must insure against at least the following perils or cause of loss: fire, lighting, extended coverage, theft,vandalism, and malicious mischief, earthquake, collapse, debris removal, 15 demolition occasional by enforcement of applicable laws and regulations, and water damage (other than caused by floods); • Include expenses incurred in the repair or replacement of any insured property (including but not limited to the fees and charges or engineers); • Cover materials and equipment in transit for incorporation in the Project stored at the site or at another location prior to being incorporated into the Project, provided that such materials and equipment have been included in an application for payment by the Developer's contractor and recommended for payment by the Developer's engineers; • Be endorsed to allow occupancy and partial utilization of the Project by the Developer and the City; • Include testing and start-up; and • Be maintained in effect until final payment is made by the City to the Developer unless otherwise agreed to in writing by the City with forty-five (45) days written notice to each additional insured. The above amounts shall be exclusive of defense costs. The City of Bozeman, its officers, agents, and employees, shall be endorsed as an additional or named insured on a primary non-contributory basis on the applicable policies. The insurance and required endorsements must be in a form suitable to City and shall include no less than a forty-five (45) day notice of cancellation or non-renewal. The City must approve all insurance coverage and endorsements prior to the Developer commencing work. In addition to the notice of cancellation to the City that must be included in the insurance policies,the Developer and its contractor(s) and engineer(s)must notify City within two (2) business days of any of their receipt of information that any required insurance coverage will be terminated or of contractor(s) or engineer(s) decision to terminate any required insurance coverage for any reason. The City must receive copies of all insurance coverages and endorsements prior to the Developer commencing construction of the Project. Section 8. General Provisions. 8.1. Conflicts of Interest; Cit>Representatives Not Individually Liable. The Developer represents that it does not employ, retain, or contract with an officer or employee of the City and that no member, officer or employee of the City has a personal or financial interest, direct or indirect, in this Agreement or in the Development, or a financial interest in the Project. No member, officer or employee of the City shall be personally liable to Developer in the event of any default under or breach of this Agreement by the City, or for any amount that may become due to Developer for any obligation issued under or arising from the terms of this Agreement. 16 8.2. Rights Cumulative. The rights and remedies of the Parties of this Agreement, whether provided by law or by this Agreement, shall be cumulative, and the exercise by any Party hereto of any one or more of such remedies shall not preclude the exercise by such Party, at the same or different times, of any other remedy for the same default or breach or of any of its remedies for any other default or breach of the Party subject to the limitation of remedies provided herein. No waiver made by such Party with respect to the performance or the manner or time thereof, of any obligation under this Agreement, shall be considered a waiver with respect to the particular obligation of the other Party or a condition to its own obligation beyond those expressly waived in writing and to the extent thereof, or a waiver in any respect in regard to any other rights of the Party making the waiver of any obligations of the other Party. Delay by a Party hereto instituting or prosecuting any cause of action or claim hereunder shall not be deemed a waiver of any rights hereunder. 8.3. Term of Agreement. (a) This Agreement shall remain in effect until the earlier of (i)the date that is 10 days after the date the City reimburses the Developer in full hereunder, or (ii)the termination of this Agreement pursuant to Section 5.2(b) or pursuant to Section 3.11; provided that this Agreement may be earlier terminated by the City in its sole discretion at any time after failure by the Developer to complete or satisfy a Milestone by the applicable Milestone Payment Date (as such date may be extended as described in Section 3.4). (b) Notwithstanding the foregoing provisions of this Section 8.3, Sections 6, 7, and 8 of this Agreement shall in all events survive the termination of this Agreement. 8.4. Limitation on City Liability. No agreements or provisions contained in this Agreement nor any agreement, covenant or undertaking by the City contained in any document in connection with the Development or the Project shall give rise to any pecuniary liability of the City or a charge against its general credit or taxing powers, or shall obligate the City financially in any way except with respect to then-available Tax Increment. No failure of the City to comply with any term, condition, covenant or agreement herein shall subject the City to liability for any claim for damages, costs or other financial or pecuniary charge except to the extent that the same can be paid or recovered from then-available Tax Increment; and no execution on any claim, demand, cause of action or judgment shall be levied upon or collected from the general credit, general funds or taxing powers of the City(except as such constitute then-available Tax Increment). Nothing herein shall preclude a proper party in interest from seeking and obtaining specific performance against the City for any failure to comply with any term, condition, covenant or agreement herein; provided that no costs, expenses or other monetary relief shall be recoverable from the City except as may be payable from the Tax Increment. This Agreement shall not constitute or be construed to give rise to a debt of the City. 8.5. Assi nment. This Agreement is unique between the City and Developer and no Party may assign any rights or privileges, or delegate any duties or obligations under this Agreement,without first obtaining the written consent of the other Party. 8.6. Successors Bound By Agreement;No Third Party Beneficiary;No Property Interest. Subject to compliance with Section 8.5,this Agreement will inure to the benefit of and be binding upon the Parties to this Agreement and their respective successors in interest and permitted assignees. This Agreement is for the exclusive benefit of the Parties, does not 17 constitute a third-party beneficiary agreement, and may not be relied upon or enforced by a third party. This Agreement, by itself, does not create or give rise to a property interest in the Land or the Development. 8.7. Prior Agreements. This Agreement supersedes, merges and voids any and all prior discussions, negotiations, agreements and undertakings between the Parties with respect to the subject matter of this Agreement; provided that this Section 8.7 shall not be construed to apply to the Agreement for Infrastructure Improvements between the City and the Developer dated [ _�, 2023. The Parties waive and release each other from any claims, actions, or causes of action that relate in any manner to any prior discussions, negotiations, agreements and undertakings between the Parties with respect to the subject matter of this Agreement. 8.8. Entire Agreement. This Agreement, including any exhibits and attachments hereto, embodies the entire agreement and understanding of the Parties with respect to its subject matter. All Parties shall be prohibited from offering into evidence in any arbitration or civil action any terms, conditions, understandings,warranties, statements or representations,whether oral or written, with respect to the subject matter of this Agreement and that are not contained in this Agreement. 8.9. Amendments, Changes and Modifications. This Agreement may be amended and any of its terms may be modified only by written amendment authorized and signed by the Parties hereto. 8.10. Headings. The headings of articles and sections in this Agreement are inserted for convenience of reference only and do not limit or amplify the terms and provisions of the Agreement in any manner. The headings will be ignored and will not affect the construction of any provisions of this Agreement. 8.11. Notice. Any formal notice, demand or communication required or permitted by the terms of this Agreement to be given to the City or the Developer will be in writing and will be delivered to such Party either: (i)by personal hand-delivery; or (ii)by depositing the same in the United States mail, certified mail with return receipt requested, addressed to such Party at the address named below, with postage prepaid thereon. Notice will be deemed complete upon receipt of the notice pursuant to any of the foregoing methods of notice. If to City: City of Bozeman Attention: Bozeman City Manager 121 N. Rouse Ave. P.O. Box 1230 Bozeman, MT 59771 If to Developer: Freestone on Main, LLC C/O Reuter Walton Development 18 4450 Excelsior Boulevard, Suite 400 Minneapolis, MN 55416 The City and the Developer, by notice given hereunder, may designate different addresses to which subsequent notices, certificates or other communications should be sent. 8.12. Severability. If any provision of this Agreement is declared void or held invalid, such provision will be deemed severed from this Agreement and the remaining provisions of this Agreement will otherwise remain in full force and effect. 8.13. Duplicate Originals or Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. 8.14. Place of Performance. The place of performance of this Agreement will be in the City of Bozeman, Gallatin County, Montana. 8.15. Governing Law. This agreement and the legal relations between the Parties hereto will be governed by and construed in accordance with the laws of the State of Montana, without giving effect to any choice of law statutes, rules, or principles. 8.16. Dispute Resolution. (a) Any claim, controversy, or dispute between the Parties, their agents, employees, or representatives shall be resolved first by negotiation between senior-level personnel from each Party duly authorized to execute settlement agreements. Upon mutual agreement of the Parties, the Parties may invite an independent, disinterested mediator acceptable to the Parties to assist in the negotiated settlement discussions. (b) If the Parties are unable to resolve the dispute within thirty (30) days from the date the dispute was first raised, then such dispute may only be resolved in a court of competent jurisdiction in compliance with the applicable law and the provisions of this Agreement. 8.17. Further Assurances and Corrective Instruments, The Parties agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Development or the Project or for carrying out the expressed intention of this Agreement. 8.18. Reports/Accountability/Public Information. Developer agrees to develop and/or provide documentation as reasonably requested by the City demonstrating the Developer's compliance with the requirements of this Agreement. Developer shall allow the City, its auditors, and other persons authorized by the City to inspect and copy its books and records for the purpose of verifying that the monies distributed to Developer pursuant to this Agreement were used in compliance with this Agreement and all applicable provisions of federal, state, and local law. The Developer shall not issue any statements, releases or information for public dissemination regarding this Agreement or the work contemplated hereunder without prior written approval of the City. 19 IN WITNESS WHEREOF,the Parties hereto have caused this Development Agreement to be executed as of the [ 1 day of[ Ora„Lx,- ], 2023. CITY OF BOZEMAN, MONTANA By: Printed Jeff ihelich ATitle: anager 63 ?IN CO. [Signature Page to Development Agreement] 20 FREESTONE ON MAIN,LLC By: Freestone JV,LLC, its Sole Member By: 421 Main Group,LLC, its Manager By: 421 Main Partners LLC, its Manager By: Ni cho as a ton,Manager [Signature Page to Development Agreement] 21 EXHIBIT A Reserved. A-1 EXHIBIT B LEGAL DESCRIPTION OF THE LAND Parcel 1: Lot 18A of the Amended Plat of Lots 14, 15, 16, 17, 18, 19, 20 & 21 in Block D of W.H. Tracy's Addition (C-17) to Bozeman, Gallatin County, Montana, according to the official plat thereof on file and of record in the office of the County Clerk and Recorder of Gallatin County, Montana. Parcel 2: The East 17 feet of Lot 26, and all of Lot 27 in Block 2 of W.H. Tracy's Addition (C-17) to Bozeman, Gallatin County, Montana, according to the official plat thereof on file and of record in the office of the County Clerk and Recorder of Gallatin County, Montana. B-1 EXHIBIT C Reserved. C-1 EXHIBIT D MILESTONES MILESTONE MILESTONE DATE Commence Construction November 30, 2023 Complete Construction August 31, 2025 D-I EXHIBIT E FORM OF DEVELOPER CERTIFICATE TO: City of Bozeman, Montana FROM: Freestone on Main, LLC (the "Developer") SUBJECT: Reimbursement for Project This Developer Certificate requests $ for reimbursement of the Project, as defined in the Development Agreement between Freestone on Main, LLC and the City of Bozeman, Montana, dated as of , 2023 (the "Development Agreement"). Capitalized terms used but not otherwise defined herein shall have the respective meanings given such terms in the Development Agreement. Pursuant to Section 5(d) of the Development Agreement, the undersigned hereby certifies on behalf of the Developer that: (a) the expenditures for which reimbursement is requested are listed in summary form in the attached schedule headed "Infrastructure Improvement Expenditures;" (b) invoices paid by the Developer corresponding to the expenditures set forth on the attached Infrastructure Improvement Expenditures schedule are appended to such schedule; (c) the amounts for which reimbursement is requested have been paid by the Developer to contractors, subcontractors, materialmen, engineers, architects or other persons who or that have performed necessary or appropriate services or supplied necessary or appropriate materials for the acquisition, construction, renovation, equipping, and installation of the Project; (d) with respect to the Project, the contractor and subcontractors were solicited and retained competitively and all persons performing work on the Project were paid the Montana prevailing wage for such work; (e) no part of the several amounts requested to be paid, as stated in such certificate, has previously been reimbursed by the City under the Development Agreement or the Agreement for Infrastructure Improvements between the City and the Developer dated [ , 2023; (f) the reimbursement of the amounts requested will not result in a breach of any of the covenants of the Developer contained in the Development Agreement; and (g) no litigation has been instituted or is threatened with regard to any amounts sought to be reimbursed, and binding and enforceable lien waivers have been obtained from all contractors, subcontractors, materialmen, and others with regard to all work related to any amounts for which reimbursement is requested. E-1 The Developer represents that all of the representations of the Developer in Section 2.2 of the Development Agreement are true and correct as of the date hereof and the Developer is not in default of the performance of any of its undertakings or obligations under Section 3 of the Development Agreement as of the date hereof. Dated: , 20_ FREESTONE ON MAIN, LLC By: Authorized Developer Representative E-2 EXHIBIT F NONDISCRIMINATION AND EQUAL PAY AFFIRMATION (name of entity submitting) hereby affirms it will not discriminate on the basis of race,color, religion, creed, sex,age, marital status, national origin,or because of actual or perceived sexual orientation,gender identity or disability and acknowledges and understands the eventual contract will contain a provision prohibiting discrimination as described above and this prohibition on discrimination shall apply to the hiring and treatments or proposer's employees and to all subcontracts. In addition, (name of entity submitting) hereby affirms it will abide by the Equal Pay Act of 1963 and Section 39-3-104, MCA(the Montana Equal Pay Act), and has visited the State of Montana Equal Pay for Equal Work"best practices" website, https;//equalpay.mt.gov/BestPractices/Employers,or equivalent "best practices publication and has read the material. Name and title of person authorized to sign on behalf of submitter F-1