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Third Draft July 18, 2005 BUSINESS SUBSIDY AGREEMENT THIS AGREEMENT, made as of the day of , 2005, by and between the CITY OF LINO LAKES (the "City ") and the YMCA OF GREATER SAINT PAUL ( "YMCA ") RECITALS WHEREAS, under Minnesota Statutes, Sections 471.15 to 471.191 (the "Recreation Act "), the City is authorized to acquire, equip and maintain recreational facilities, and also to cooperate with a nonprofit organization in the operation of such a recreational program in any manner in which the parties mutually agree; and WHEREAS, in furtherance of a cooperative program under the Recreation Act the City and the YMCA have entered into that certain Development Agreement dated June 16, 2005 (the "Development Agreement "), which specifies the parties' anticipated responsibilities regarding the development and financing of a facility that includes a teen center, gym, indoor pool, cardiovascular /strength training area, aerobic studio, family program space and Kids Stuff (the "Facility "); and WHEREAS, the Facility will be constructed by the YMCA on land currently owned by the City, described in Exhibit A hereto (the "Site "); and WHEREAS, the Development Agreement contemplates, among other things, that the City will convey or lease the Site to the YMCA without cost to the YMCA, and further that the City will contribute $1,500,000 in funds toward construction of the Facility, all subject to the terms of definitive agreements to be entered into by the parties; and WHEREAS, the City expects to finance its financial contribution through issuance of bonds (the "Abatement Bonds ") secured by property tax abatements under Minnesota Statutes, Sections 469.1812 to 469.1815 (the "Abatement Act "); and WHEREAS, in connection with issuance of the Abatement Bonds, the City has approved a resolution granting a property tax abatement under the Abatement Act (the "Abatement Resolution ") for certain property that is adjacent to and benefits from the Facility; and WHEREAS, the City also expects to finance additional costs of the Facility through issuance of so- called qualified 501(c)(3) revenue bonds (the "Revenue Bonds "); and WHEREAS, while the Facility will be operated in part as a cooperative effort with the City under the Recreation Act, the City has determined that it's contribution of land and City funds to the YMCA constitutes a business subsidy within the meaning of Minnesota Statutes, Section 116J.993 to 116J.995 (the "Business Subsidy Act "); and SJB- 265334v13 LN 140 -90 -33-