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Home My WebLink About2025.07.07 CC Packet A. CALL TO ORDER B. ROLL CALL C. PLEDGE OF ALLEGIANCE D. APPROVAL OF MINUTES 1. June 2, 2025, Council Meeting 2. June 12, 2025, Schwieters Open House E. APPROVAL OF AGENDA F. APPOINTMENTS/PRESENTATIONS 1. Presentation of 2024 Audit Report – Smith Schafer & Associates G. CONSENT AGENDA All matters listed under the Consent Agenda are considered to be routine by the City Council and will be enacted by one motion and a roll call vote. If a member of the City Council or the public wishes to discuss an item, that item will be removed from the Consent Agenda and will be considered separately. 1. Approve Claims Roster 2. Approve Annual Performance Review for Public Works Worker Jeff Maas 3. Approve Hiring of Mason Libke as New Building Inspector 4. Approve Hiring of Mike Perron as New Public Works Worker 5. Approve Resignation of Utility Lead Worker Rick Fox 6. Approve Internal Advertisement for Public Works Lead Utility Worker Position 7. Approve Transfer of Ownership of AED to the Hugo Fire Department from the Hugo Good Neighbors Food Shelf 8. Approve Hugo Firefighter’s Relief Association Request for Increase in Lump-Sum Pension 9. Approve Hugo Firefighter’s Relief Association Request to Ratify the Interest Rate for Deferred Members 10. Approve Revisions to the Hugo Firefighter’s Relief Association Bylaws 11. Approve Donation from the St. John’s the Baptist Men’s Club to the Hugo Fire Department 12. Approve Reduction in Letter of Credit for Watercrest 1st Addition 13. Approve Resolution Approving Encroachment Agreement for 4801 142nd Street North 14. Approve Resolution Approving Encroachment Agreement for 15539 Goodview Trail North Mayor: Tom Weidt Councilmembers: Becky Petryk, Ward 1 Ben Krull, Ward 2 Dave Strub, Ward 3 Mike Miron, At Large City Council Agenda Monday, July 7, 2025 Address: 14669 Fitzgerald Ave. N. Hugo, MN 55038 Phone: 651-762-6300 Website: www.ci.hugo.mn.us 15. Approve Resolution Approving Encroachment Agreement for 6209 157th Street North 16. Approve Quote for Gravel Contract H. PUBLIC HEARING 1. Issuance of Educational Facilities Revenue Bonds – Legacy Christian Academy I. UNFINISHED BUSINESS 1. Highway 61 Construction Update J. NEW BUSINESS 1. Lions Volunteer Park Veterans Memorial Sub-Committee K. VISITOR PRESENTATIONS 1. Nothing Scheduled L. COUNCIL PRESENTATIONS 1. Nothing Scheduled M. ADMINISTRATIVE PRESENTATIONS 1. Schedule Night to Unite on Tuesday, August 5, 2025 2. Schedule Midyear Budget Workshop for Thursday, August 28, 2025 3. Schedule Annual Citywide Bus Tour for Saturday, October 4, 2025 N. ADJOURNMENT BACKGROUND MEMO FOR THE CITY COUNCIL MEETING ON JULY 7, 2025 D.1 Minutes for the June 2, 2025, Council Meeting D.2 Minutes for the June 12, 2025, Schwieters Open House Staff recommends Council approve the above minutes as presented. F.1 Presentation of 2024 Audit Report – Smith Schafer & Associates Jill Schultz from the independent accounting firm of Smith Schafer & Associates will present a recap of the audit of City finances for the 2024 fiscal year. The Council will listen to the presentation from Jill after which questions will be taken. The 2024 Comprehensive Annual Financial Report can be found on the City’s website at https://www.ci.hugo.mn.us/finance . City staff recommends Council formally accept the 2024 City Audit as recommended by Finance Director Anna Wobse G. 1 Approve Claims Roster Staff recommends Council approve the Claims Roster as presented. G.2 Approve Annual Performance Review for Public Works Worker Jeff Maas Jeff Maas was hired by the City of Hugo on July 24, 2006, as a Public Works Worker. Public Works Director Scott Anderson recommends Council approve the annual performance review for Public Works Worker Jeff Maas. G.3 Approve Hiring of Mason Libke as New Building Inspector The City advertised for a Building Inspector position. Nine people applied for the position. After conducting an interview and completed reference checks, Community Development Director Rachel Juba has selected Mason Libke to fill the position. Staff recommends the hiring of Mason Libke as the new Building Inspector at Pay Grade 7, Minimum Step with a start date of July 7, 2025. G.4 Approve Hiring of Mike Perron as New Public Works Worker After conducting interviews for a new Public Works Worker, Public Works Director Scott Anderson has selected Mike Perron to fill the position. Staff recommends the hiring of Mike Perron as the new Public Works Worker at Pay Grade 5, Step 3 with a start date to be determined. G.5 Approve Resignation of Utility Lead Worker Rick Fox On Wednesday, June 18, 2025, Public Works Utility Lead Worker Rick Fox verbally submitted his resignation from his position at the City of Hugo. Staff recommends Council approve the resignation of Rick Fox effective June 18, 2025. G.6 Approve Internal Advertisement for Public Works Lead Utility Worker Position The position of Utility Lead Worker has become vacant with the resignation of Richard Fox. Since his departure, Public Works Director, Scott Anderson, has had several current Hugo Public Works employees express interest in the position. Therefore, staff would like to advertise internally to fill this position. If there is no qualified internal applicant, staff would then look to advertise outside of the Hugo Public Works organization. Staff requests Council approval to conduct interviews with in-house candidates who are interested in the Utility Lead Worker position. G.7 Approve Transfer of Ownership of AED to the Hugo Fire Department from the Hugo Good Neighbors Food Shelf The Hugo Good Neighbors Food Shelf has an Automated External Defibrillator (AED) Unit it would like to donate to the Hugo Fire Department. The Department would take on the responsibility of maintaining as they do all other AED’s in City buildings and vehicles. All donations to the Fire Department must be approved by Council. Staff recommends Council accept the donation from the Hugo Good Neighbors Food Shelf to the Hugo Fire Department. G.8 Approve Hugo Firefighter’s Relief Association Request for Increase in Lump-Sum Pension The Board of Trustees for the Hugo Firefighter’s Relief Association has formally requested City Council ratification of an increase of $500 per year of service in their lump-sum pension benefit. The Finance Department has reviewed this request and finds it to be financially feasible and consistent with the Pension Fiscal Policy adopted in April, 2012. Staff recommends Council ratify the Board of Trustees request for a $500 increase in their lump-sum pension benefit and corresponding change to their bylaws. G.9 Approve Hugo Firefighter’s Relief Association Request to Ratify the Interest Rate for Deferred Members The Office of the State Auditor recently issued guidance stating that, in order for deferred members to be credited with interest, the rate must be approved by a relief association’s board of trustees and ratified by the affiliated municipal governing board. To be in compliance with this mandate, the Hugo Firefighter’s Relief Association voted to maintain the 5% interest rate earned by deferred members as currently stated in the bylaws and has formally requested City Council ratification of the interest rate. Staff recommends Council ratify the 5% interest rate for deferred members. G.10 Approve Revisions to the Hugo Firefighter’s Relief Association Bylaws The Hugo Firefighter’s Relief Association Board of Trustees recently participated in a training session presented by Ed Hoffman from the Minnesota State Fire Department Association. Best practices were reviewed, and updates were provided on state statutes. The current bylaws were reviewed to identify omissions, corrections and statute updates needed. Sections were revised to reflect statutory changes, language updates were made, and officer salaries were increased. The Hugo Firefighter’s Relief Association voted to approve the bylaws as presented and has formally requested that the City Council ratify the revisions. Staff recommends the City Council ratify the revisions to the Hugo Firefighter’s Relief Association Bylaws. G.11 Approve Donation from the St. John’s the Baptist Men’s Club to the Hugo Fire Department St. John’s the Baptist Men’s Club would like to donate $500 to the Hugo Fire Department. All donations to the Fire Department must be approved by the City Council. Staff recommends Council approve the $500 donation. G.12 Approve Reduction in Letter of Credit for Watercrest of Hugo 1st Addition The Watercrest of Hugo 1st Addition has had substantial work completed to date and Artemis Development Company, LLC. is requesting a reduction in the letter of credit. The current letter of credit for the Shores of Oneka Lake Project is in the amount of $1,454,987. Staff has inspected the work completed to date and recommends Council approve the reduction in the letter of credit to $145,498 based on the value of work remaining to be completed G.13 Approve Resolution Approving Encroachment Agreement for 4801 142nd Street North Anthony and Andrea Liebhard have requested an encroachment agreement to allow for the construction of a shed within a drainage and utility easement on property located at 4801 142nd Street North. The Senior Engineering Technician has reviewed the location of the shed and is comfortable with the request. Staff recommends that the City Council approve the resolution approving an encroachment agreement for 4801 142nd Street North. G.14 Approve Resolution Approving Encroachment Agreement for 15539 Goodview Trail North Caitlin and Nicholas Frucci have requested an encroachment agreement to allow for the construction of a fence within a drainage and utility easement on property located at 15539 Goodview Trail North. The Senior Engineering Technician has reviewed the location of the fence and is comfortable with the request. Staff recommends that the City Council approve the resolution approving an encroachment agreement for 15539 Goodview Trail North. G.15 Approve Resolution Approving Encroachment Agreement for 6209 157th Street North Anthony and Judith Straquadine have requested an encroachment agreement to allow for the construction of a fence within a drainage and utility easement on property located at 6209 157th Street North. The Senior Engineering Technician has reviewed the location of the fence and is comfortable with the request. Staff recommends that the City Council approve the resolution approving an encroachment agreement for 6209 157th Street North. G.16 Approve Quote for Gravel Contract Staff received quotes for class 5 modified gravel to be placed on our rural gravel roads. Staff received 3 quotes, Dresel Contracting, Miller Excavating and Arnt Construction. Dresel Contracting provided the low quote of $15.60 per ton delivered price. The City will need approximately 5,600 for a total contract of $87,360.00. The roads included in this year’s re- graveling project are: Fiona Rd, 140th St and 147th St. Staff recommends Council approval for a contract with Dresel Contracting to provide class 5 modified gravel at $15.60 per ton. H.1 Public Hearing on the Issuance of Educational Facilities Revenue Bonds – Legacy Christian Academy At the May 5, 2025, City Council meeting, the Council adopted a resolution calling for a public hearing on a proposal to Issue Educational Facilities Revenue Bonds in an amount not to exceed $6,000,000, on behalf of Legacy Christian Academy (the “Borrower”), a Minnesota nonprofit corporation organized under the laws of the State of Minnesota. The bond proceeds will be used to finance the acquisition and improvements of a currently leased pre-k—12 educational facility located at 3037 Bunker Lake Blvd NW in Andover. The Borrower has agreed to pay the City of Hugo an issuer’s administrative fee of ½ of 1% of the principal amount of the bonds. Taft Law, the City’s bond counsel, has reviewed this request and finds it to be a proper use of the City’s bonding authority. The City is only serving as the bond issuer and will have no obligations for repaying investors. Following the public hearing, staff recommends adoption of a Resolution Approving the Issuance and Sale of Educational Facilities Revenue Bonds. I.1 Highway 61 Construction Update Washington County, in partnership with the City of Hugo and MNDOT, are making improvements to TH 61 between Egg Lake Road and Frenchman Road. Construction is scheduled to begin on July 7, 2025, with TH 61 remaining open to traffic except for a two-week period. TH 61 between Egg Lake Road and Frenchman Road will be closed for a two-week period that is currently scheduled to start July 28th. The detour is extensive and shown on the Washington County Construction Newsletter. Washington County has provided extensive notifications regarding the upcoming project. City working hours are 7:00 a.m. to 7:00 p.m. Monday through Friday and 8:00 a.m. to 5:00 p.m. on Saturdays, with no work on Sunday or holidays. The contractor is requesting an extension of the working hours on Saturdays during the road closure. Specifically, they are requesting that working hours be extended to 7:00 a.m. to 7:00 p.m. on Saturdays to limit the duration of the closure. Staff is recommending Council grant the extension on the working hours as requested. J.1 Lions Volunteer Park Veterans Memorial Sub-Committee At the meeting of February 1, 2021, Council approved the overall site plan and preliminary designs for Lions Park. The plan included a future memorial in the southeast corner of Lions Volunteer Park in honor of Hugo Veterans. Future planning of the memorial was anticipated to involve the Hugo American Legion, and they would like to begin its planning. Planning efforts will include operation, fundraising, and design of the memorial. At their meeting of June 18, 2025, the Parks Commission informally discussed the memorial and Commissioners Andrew Reding and Cathy Arcand volunteered to help. Five representatives of the Hugo American Legion have volunteered: Dave Fleming, Marcy Brake, Bill Juergens, Paul Christianson, and Carley Brake. Barb Connelly has volunteered to represent the Yellow Ribbon Network. Staff recommends the authorization of the Lions Volunteer Park Veterans Memorial Sub-Committee and appointment of its membership. M1 Schedule Night to Unite on Tuesday, August 5, 2025 Night to Unite (National Night Out) is an annual event designed to strengthen communities. In the past, Council has attended neighborhood parties along with Fire Department and Washington County Sheriff’s Office personnel. Staff recommends Council schedule a meeting to attend National Night Out events on Tuesday, August 5, 2025. M.2 Schedule Midyear Budget Workshop for Thursday, August 28, 2025 Staff recommends Council schedule the Midyear Budget Workshop for Thursday, August 28, 2025, at 6 p.m. in the Council Chambers. M.3 Schedule Annual Citywide Bus Tour for Saturday, October 4, 2025 Staff recommends Council schedule the annual bus tour for Saturday, October 4, 2025, beginning at 10 a.m. Beginning and ending locations to be determined. N. Adjournment MINUTES City Council Meeting City Hall Council Chambers Monday, June 2, 2025 7:00 p.m. Call to Order Mayor Weidt called the meeting to order at 7:00 p.m. Roll Call and Pledge of Allegiance COUNCIL PRESENT: Krull, Miron, Strub, Weidt COUNCIL ABSENT: Petryk OTHERS PRESENT: City Administrator Bryan Bear, City Attorney Dave Snyder, City Engineer Mark Erichson, Community Development Director Rachel Juba, City Clerk Michele Lindau Approve Minutes for the May 5, 2025, Minutes for City Administrator Performance Review Mayor Weidt read the summary out loud. Miron made motion, Strub seconded, to approve the minutes for the City Administrator’s Performance Review on April 21, 2025, as presented. All Ayes. Motion carried. Approve Minutes for the May 5, 2025, City Council Meeting Krull made motion, Strub seconded, to approve the minutes for City Council meeting held on May 5, 2025, as presented. All Ayes. Motion carried. Approval of Agenda Weidt made motion, Miron seconded, to approve the agenda as presented. All Ayes. Motion carried. Special Event Permit for Brats, Bags, and Baskets Fundraiser for the Food Shelf on September 20, 2025 The Hugo Lions Club is requesting approval of their Special Event Permit to hold an event at Lions Park on Saturday, September 20, 2025. All proceeds will go to the Hugo Good Neighbors Food Shelf. Hugo Lions member Jason Schwieger and Food Shelf volunteers Jeff Fiedler and Kris Greene presented information on the event to the Council and requested they co-sponsor the event by waiving the special event permit fee and allow use of the Lions Volunteer Park and Pede Pedersen Pavilion on that day. Council Meeting Minutes for June 2, 2025 Page 2 of 7 Miron made motion, Krull seconded, to approve the Special Event Permit and co-sponsor the event by waiving the permit fee, and providing the use of Lions Volunteer Park and the pavilion for the Brats, Bags, and Baskets Fundraiser All Ayes. Motion carried. Approval of Consent Agenda Krull made motion, Strub seconded, to approve the following Consent Agenda: 1. Approve Claims Roster 2. Approve Annual Performance Review for Public Works Mechanic Steven Garcia 3. Approve Annual Performance Review for Public Works Worker Riley Hollerback 4. Approve Annual Performance Review for Public Works Streets Lead Worker Tom Smith 5. Approve Hiring of Public Works Seasonal Employee Eli Johnson 6. Approve Donation to the Hugo Fire Department from the Hugo American Legion 7. Approve Special Event Permit for Tough Mudder on June 28-29, 2025 8. Approve Temporary Liquor License for Tough Mudder on June 28-29, 2025 9. Approve Temporary Liquor License for Brats, Bags, and Baskets Fundraiser for the Food Shelf on September 20, 2025 10. Approve the Capital City Regional Firefighters’ Association Reciprocal Fire Service Agreement 11. Approve Resolution Approving Encroachment Agreement for 6230 157th Street North 12. Approve Resolution Approving Encroachment Agreement for 4670 Empress Way North 13. Approve Resolution Approving Encroachment Agreement for 14225 Geneva Avenue North 14. Approve Resolution Approving Encroachment Agreement for 6220 157th Street North 15. Approve Resolution Approving Encroachment Agreement for 15519 Goodview Trail North 16. Approve Resolution Approving Encroachment Agreement for 6240 157th Street North 17. Approve Authorization for Amendments to the Fence Ordinance 18. Approve Resolution to Close the Coronavirus Relief Fund and Transfer Investment Income All Ayes. Motion carried. Approve Claims Roster Adoption of the Consent Agenda approved the Claims Roster as presented. Approve Annual Performance Review for Public Works Mechanic Steven Garcia At its June 6, 2023, meeting, Council approved the hiring of Steve Garcia as the new Public Works Mechanic beginning June 7, 2023. Adoption of the Consent Agenda approved the Annual Performance Review for Public Works Mechanic Steve Garcia. Council Meeting Minutes for June 2, 2025 Page 3 of 7 Annual Performance Review for Public Works Worker Riley Hollerback At its June 6, 2022, meeting, Council approved the hiring of Riley Hollerback as a Public Works Worker beginning on June 30, 2022. Adoption of the Consent Agenda approved the Annual Performance Review for Public Works Worker Riley Hollerback. Approve Annual Performance Review for Public Works Streets Lead Worker Tom Smith Tom Smith was hired by the City of Hugo on June 26, 2000, as a Worker in Public Works Department and promoted to Streets Lead Worker on April 17, 2023. Adoption of the Consent Agenda approved the annual performance review for Public Works Worker Tom Smith. Approve Hiring of Public Works Seasonal Employee Eli Johnson With the vacant Public Works position, Staff recommends hiring former seasonal worker, Eli Johnson, to help with maintenance activities until a full-time employee is hired to fill the open position. Eli Johnson worked as a Public Works Seasonal for the past two summers while attending college. Adoption of the Consent Agenda approved the hiring of Eli Johnson as a seasonal Public Works employee. Approve Donation to the Hugo Fire Department from the Hugo American Legion The Hugo American Legion requested to donate $1,000 to the Hugo Fire Department from pull- tab proceeds for equipment and training. All donations to the Fire Department needed to be approved by the Council. Adoption of the Consent Agenda approved the donation of $1,000 to the Hugo Fire Department. Approve Special Event Permit for Tough Mudder on June 28-29, 2025 Tough Mudder had applied for a Special Event Permit to hold a two-day endurance sport event at Wild Wings Game Farm on June 28-29, 2024. This would be the ninth year the event was held at Wild Wings. A Special Event Permit approved by Council was necessary because there was estimated to be 5,800 people on site on Saturday and 1,500 on Sunday. There would also be impacts to public streets, use of an amplified sound system, and alcohol served. Adoption of the Consent Agenda approved the Special Event Permit for the Tough Mudder on June 28-29, subject to the conditions in the staff memo. Approve Temporary Liquor License for Tough Mudder on June 28-29, 2025 The Hugo Lions Club had submitted a temporary liquor license application to serve beer and seltzers at the Tough Mudder event to be held at Wild Wings Game Farm on June 28-29. Adoption of the Consent Agenda approved the temporary liquor license for the Lions Club for Tough Mudder. Council Meeting Minutes for June 2, 2025 Page 4 of 7 Approve Temporary Liquor License for Brats, Bags, and Baskets Fundraiser for the Food Shelf on September 20, 2025 The Hugo Lions Club had submitted a temporary liquor license application to serve beer and seltzers at the Brats, Bags, and Baskets fundraiser event to be held at the Lions Volunteer Park on September 20, 2025. S Adoption of the Consent Agenda approved the temporary liquor license for the Lions Club for Brats, Bags, and Baskets fundraiser. Approve the Capital City Regional Firefighters’ Association Reciprocal Fire Service Agreement Hugo Fire Chief Jim Compton, Jr., requested on behalf of the Capital City Regional Firefighter’s Association to enter into a Reciprocal Fire Service Agreement designed to formalize mutual aid capabilities between the 33 fire departments in the Association. This agreement represented a collective effort to streamline and strengthen the regional response framework by enabling departments to request and provide mutual aid under clear, standardized terms. The agreement would allow the City of Hugo to utilize resources from fire departments that were outside the City’s normal Auto/Mutual Aid response if needed. The Hugo Fire Department believed this agreement will greatly enhance the Department’s ability to support one another and serve communities more effectively during times of need. Adoption of the Consent Agenda approved the Capital City Regional Firefighters Association Reciprocal Fire Service Agreement. Approve Resolution Approving Encroachment Agreement for 6230 157th Street North Ryan and Sarah Swenson had requested an encroachment agreement to allow for the construction of a fence within a drainage and utility easement on property located at 6230 157th Street North. The Senior Engineering Technician had reviewed the location of the fence and was comfortable with the request. Adoption of the Consent Agenda approved RESOLUTION 2025-17 APPROVING AN ENCROACHMENT AGREEMENT TO ALLOW CONSTRUCTION OF A FENCE WITHIN A DRAINAGE AND UTILITY EASEMENT ON THE PROPERTY LOCATED AT 6230 157th STREET NORTH. Approve Resolution Approving Encroachment Agreement for 4670 Empress Way North Jack and Nicole Morrisette had requested an encroachment agreement to allow for the construction of a fence within a drainage and utility easement on property located at 4670 Empress Way North. The Senior Engineering Technician had reviewed the location of the fence and was comfortable with the request. Adoption of the Consent Agenda approved RESOLUTION 2025-18 APPROVING AN ENCROACHMENT AGREEMENT TO ALLOW CONSTRUCTION OF A FENCE WITHIN A DRAINAGE AND UTILITY EASEMENT ON THE PROPERTY LOCATED AT 4670 EMPRESS WAY NORTH Council Meeting Minutes for June 2, 2025 Page 5 of 7 Approve Resolution Approving Encroachment Agreement for 14225 Geneva Avenue North Andrew and Julia Giesen had requested an encroachment agreement to allow for the construction of a fence within a drainage and utility easement on property located at 14225 Geneva Avenue North. The Senior Engineering Technician had reviewed the location of the fence and was comfortable with the request. Adoption of the Consent Agenda approved RESOLUTION 2025- 19 APPROVING AN ENCROACHMENT AGREEMENT TO ALLOW CONSTRUCTION OF A FENCE WITHIN A DRAINAGE AND UTILITY EASEMENT ON THE PROPERTY LOCATED AT 14225 GENEVA AVENUE NORTH. Approve Resolution Approving Encroachment Agreement for 6220 157th Street North Scott and Margaret Cregan had requested an encroachment agreement to allow for the construction of a fence within a drainage and utility easement on property located at 6220 157th Street North. The Senior Engineering Technician had reviewed the location of the fence and was comfortable with the request. Staff recommends that the City Council approve the resolution approving an encroachment agreement for 6220 157th Street North. Adoption of the Consent Agenda approved RESOLUTION 2025-20 APPROVING AN ENCROACHMENT AGREEMENT TO ALLOW CONSTRUCTION OF A FENCE WITHIN A DRAINAGE AND UTILITY EASEMENT ON THE PROPERTY LOCATED AT 6220 157th STREET NORTH. Approve Resolution Approving Encroachment Agreement for 15519 Goodview Trail North Gracie and Justin Chavez had requested an encroachment agreement to allow for the construction of a fence within a drainage and utility easement on property located at 15519 Goodview Trail North. The Senior Engineering Technician had reviewed the location of the fence and was comfortable with the request. Adoption of the Consent Agenda approved RESOLUTION 2025-21 APPROVING AN ENCROACHMENT AGREEMENT TO ALLOW CONSTRUCTION OF A FENCE WITHIN A DRAINAGE AND UTILITY EASEMENT ON THE PROPERTY LOCATED AT 15519 GOODVIEW TRAIL NORTH. Approve Resolution Approving Encroachment Agreement for 6240 157th Street North Kathryn and Mitchell Fiega had requested an encroachment agreement to allow for the construction of a fence within a drainage and utility easement on property located at 6240 157th Street North. The Senior Engineering Technician had reviewed the location of the fence and was comfortable with the request. Staff recommends that the City Council approve the resolution approving an encroachment agreement for 6240 157th Street North. Adoption of the Consent Agenda approved RESOLUTION 2025-22 APPROVING AN ENCROACHMENT AGREEMENT TO ALLOW CONSTRUCTION OF A FENCE WITHIN A DRAINAGE AND UTILITY EASEMENT ON THE PROPERTY LOCATED AT 6240 157th STREET NORTH. Approve Authorization for Amendments to the Fence Ordinance Section 90-227 of City Code outlined requirements for fences but did not have a process for placing a fence within a drainage and utility easement. New residential developments in the City of Hugo were required to dedicate easements for drainage and utility purposes around the Council Meeting Minutes for June 2, 2025 Page 6 of 7 perimeter of single-family lots. When a resident wanted to construct a fence on their property line, it was very likely it would be located the easement. Staff had been requiring that residents request an Encroachment Agreement from the City Council, which lengthens the approval process for a fence. The agreement allowed the resident to construct a fence within the easement, and stated that if the City needed to perform construction work within the easement the fence would be removed at the owner’s expense. Staff had identified a need to codify that a fence placed within an easement may be removed at the owner’s expense, which would streamline the approval process by permitting encroachments administratively. Adoption of the Consent Agenda approved staff’s request to work with the City Attorney on drafting text amendments to the fence ordinance, and to hold a public hearing on the text amendments with the Planning Commission. Approve Resolution to Close the Coronavirus Relief Fund and Transfer Investment Income The Governmental Accounting Standards Board (GASB), along with the City’s auditors, recommend closing fund accounts when the intended use of those accounts no longer existed. As of December 31, 2024, all Coronavirus Relief Funding had been expended and properly reported. Investment income remained in the Fund and according to United States Treasury guidance, interest earned did not need to be remitted to the Treasury nor used for specific program-related expenditures. This investment income was not restricted for any specific purpose and therefore could be transferred to any fund designated by the City Council. Adoption of the Consent Agenda approved RESOLUTION 2025 – 23 CLOSING THE CORONAVIRUS RELIEF FUND AND TRANSFERRING INVESTMENT INCOME TO THE STREET CIP FUND. Schwieters Open House on June 12, 2025 City Administrator Bryan Bear informed Council that Schwieters had invited Council to their open house on Thursday, June 12 from 11 a.m. – 2 p.m. Strub made motion, Miron seconded, to schedule a meeting to attend the Schwieters Open House on June 12, 2025. All Ayes. Motion carried. Storytime at Lions Volunteer Park on Wednesday, June 25, 2025 City Administrator Bryan Bear informed Council that the Washington County Library will be hosting Story Time in Lions Volunteer Park on Wednesday, June 25, 2025, at 10 a.m. Concert at Lions Volunteer Park on Friday, July 11, 2025 City Administrator Bryan Bear informed Council that the Washington County Library will be hosting a concert at Lions Volunteer Park on Friday, July 11, 2025, at 6 p.m. Council Meeting Minutes for June 2, 2025 Page 7 of 7 Reschedule Council Photo for Monday, July 7, 2025 City Administrator Bryan Bear requested Council reschedule the Council photo for Monday, July 7, 2025, at 6 p.m. Strub made motion, Krull seconded, to schedule the photo for Monday, July 7, 2025, at 6 p.m. All Ayes. Motion carried. Adjournment Miron made motion, Strub seconded, to adjourn at 7:15 p.m. All Ayes. Motion carried. Respectfully Submitted, Michele Lindau, City Clerk, MINUTES City Council-Schwieters Open House 13925 Fenway Boulevard North Thursday, June 12, 2025 11:00 a.m. COUNCIL PRESENT: Krull, Miron, Petryk, Strub COUNCIL ABSENT: Weidt Council attended the open house event at Schwieters in the Bald Eagle Industrial Park. The event ended at approximately 2 p.m. Respectfully Submitted, Bryan Bear City Administrator City of Hugo Claims July 7, 2025 G. 1 Vendor Invoice Amount Description Department Abdo Financial Solutions LLC 508026 3,050.00$ Accounting Assistance Finance Dept Alert-All Corp. W50430 1,128.00$ Fire Department Open House Supplies Fire Dept Allstream 21603702 140.46$ Fax Line Administration Amazon Capital Services 1YLD-7CHQ-371C 169.56$ Breakroom Supplies Public Works Amazon Capital Services 1VLX-PWTX-6YXC 49.66$ Binder Clips for Trash Cans Parks Dept Amazon Capital Services 1VLX-PWTX-6YXC 32.39$ Door Drip Edge - Water Tower No. 3 Water Utility Amazon Capital Services 1VLX-PWTX-6YXC 16.81$ Parts - Restroom Light (CH) Gen Gov't Bldgs American Planning Association 242929-250406 533.00$ 2025 Membership Dues - Juba Planning & Zoning Aspen Mills 355498 227.40$ Radio Holders Fire Dept Aspen Mills 355498 204.80$ Radio Straps Fire Dept Aspen Mills 355498 88.95$ EMT Pants & Belt Fire Dept Aspen Mills 355998 44.55$ Name Tags Fire Dept Aspen Mills 355998 22.00$ Embroidery Fire Dept Aspen Mills CM5433 157.80$ Radio Holders Fire Dept Aspen Mills CM5433 (227.40)$ Radio Holders (Returned) Fire Dept Atlas Copco Compressors LLC 1125067029 1,749.10$ Annual Compressor Maintenance Public Works Baller, Scott CLAIM 119.00$ Kaplan Education Registration - Residential Update Course Building Inspections Bear, Bryan CLAIM 519.38$ 2025 LMC Annual Conference Lodging - Bear Administration CDW Government AE32F7Q 417.90$ UPS Backups for SCADA System Water & Sewer Cemstone 7759302 323.90$ Asphalt Street Dept Cemstone 7759838 234.40$ Asphalt Street Dept Cemstone 7761313 717.78$ Asphalt Street Dept Cemstone 7771224 2,279.34$ Asphalt Street Dept Cemstone 7776288 964.71$ Asphalt Street Dept Cemstone 7785664 720.26$ Asphalt Street Dept Cemstone 7787445 630.42$ Asphalt Street Dept Cemstone 7792850 643.20$ Asphalt Street Dept Cemstone 7796426 759.54$ Asphalt Street Dept Century College CI0000010922 695.00$ Electric Vehicle Stored Energy Fire Dept Century Link 651 429-3212 75.23$ Fire Station Phone Lines Fire Dept Century Link 651 429-3212 75.23$ Fire Station Phone Lines Fire Dept Cintas Corporation 5274924008 180.22$ First Aid Supplies Public Works Cintas Corporation 5274924008 89.87$ First Aid Supplies Gen Gov't Bldgs City of Maplewood 20770 1,357.00$ Live Fire Training Fire Dept Comcast 5/18/2025 265.89$ Business Internet (thru June 27) Fire Dept Comcast 6/12/2025 25.17$ Business Cable (thru July 21) Administration Comcast 6/18/2025 265.89$ Business Internet (thru July 27) Fire Dept Companion Animal Control LLC May 822.40$ Callout Fees & Mileage Animal Control Companion Animal Control LLC May 500.00$ Boarding & Rescue Fees Animal Control Core & Main LP X068258 5,390.06$ Radio Meters Water Utility Cornerstone Occupational Health Spec. FOX(HU0000 50.00$ Personnel Testing Water & Sewer Cornerstone Occupational Health Spec. LOEFFL0000 50.00$ Personnel Testing Public Works Davis Mechanical Systems Inc 101461-1 4,795.00$ Furnace & A/C Replacements - 4 Units (Final) Gen Gov't Bldgs Davis Mechanical Systems Inc 101781 1,343.75$ Spring HVAC Maintenance Gen Gov't Bldgs Davis Mechanical Systems Inc 101808 4,975.00$ Spring HVAC Maintenance Public Works Dell Marketing LP 10818226524 919.66$ Laptop Computer Finance/Water & Sewer Denaway, Shayla CLAIM 131.19$ Stakes for Willow Control Trail Signs (Amazon) Parks Dept Denaway, Shayla CLAIM 20.17$ Geocaching Supplies (Amazon) Parks Dept Electric Fire & Security 59740 550.00$ Router & Install - Fire Alarm Panel (HFD) Fire Dept Electric Fire & Security 59740 770.00$ Wireless Horn Strobe & Install (HFD) Fire Dept Electric Fire & Security 59740 428.00$ Annual Fire Alarm Monitoring Fee (4/01/25-3/31/26) Fire Dept Envirotech Services Inc CD202514463 80,519.60$ Chloride Application (Dust Control Project) Street Dept Ferguson Waterworks 547931 900.00$ Straw Mats Stormwater Fund Ferguson Waterworks 548059 65.64$ Turf Staples Stormwater Fund Fire Instruction Rescue Education 7531 650.00$ Fire Behavior Training Fire Dept Fire Safety USA Inc 202494 466.70$ Repairs - Unit #7104-18 Fire Dept Flagship Recreation F23540 997.43$ Playground Replacement Parts - Lions Park Parks Dept Flagship Recreation F23616 997.43$ 2nd Set of Playground Replacement Parts - Lions Park Parks Dept Forest Lake NAPA May 35.78$ Auto Parts & Shop Supplies Various Frattallone's Hardware Store 151222/B 1.98$ Hardware - Lift Station No. 2 Sewer Utility Gene's Disposal Service Inc 530572 4,080.00$ Trash & Appliance Removal - Cleanup Day Recycling Gene's Disposal Service Inc 530688 121.64$ June Waste Hauling - City Hall Gen Gov't Bldgs Gene's Disposal Service Inc 530688 258.47$ June Waste Hauling - Fire Station Fire Dept Gene's Disposal Service Inc 530688 1,020.30$ June Waste Hauling - PW Facility Public Works Gene's Disposal Service Inc 503688 253.84$ June Waste Hauling - Rice Lake Room Gen Gov't Bldgs Gene's Disposal Service Inc 503688 311.09$ June Waste Hauling - Lions Park Parks Dept Gene's Disposal Service Inc 503688 253.84$ June Waste Hauling - Hanifl Fields Parks Dept Gopher State One Call 5050490 638.55$ May Service Charges Water & Sewer Govt Finance Officers Assn 25301 460.00$ 2024 ACFR Review Fees Finance Dept Grainger 9533343795 207.72$ Part Bins Public Works Grainger 9490982866 (126.13)$ Cold Weather Gear - Siebenaler (Returned) Street Dept Granicus Inc 201979 10,129.35$ Web Streaming Service (05/07/25 thru 05/06/26) Audio/Video Granicus Inc 23244 (9,979.04)$ Web Streaming Service Credit (360 Day Credit on Current Service) Audio/Video Granicus Inc 205810 11,069.82$ Upgraded Web Streaming Service (05/12/25 thru 05/06/26) Audio/Video Granicus Inc 205810 1,020.25$ Clear Caster Setup (One-Time Fee) Audio/Video Granicus Inc 205830 4,226.75$ Live Cast Encoder Hardware Audio/Video Hawkins Inc 7078369 899.64$ Water Chemicals Water Utility Page 1 City of Hugo Claims July 7, 2025 G. 1 Vendor Invoice Amount Description Department Hawkins Inc 7099076 30.00$ Water Chemicals (Cylinder Charge) Water Utility HD Sod Inc 13939 56.25$ Sod - Lions Park Parks Dept Hisdahl Inc 18254 117.00$ Par Tags Fire Dept Home Depot Credit Services 4081775 303.52$ Trash Bags Parks Dept Home Depot Credit Services 4081775 119.92$ Reach Tools Parks Dept Home Depot Credit Services 4081775 11.96$ Part Organizers (2) Parks Dept Home Depot Credit Services 2515924 89.94$ Reach Tools Parks Dept Home Depot Credit Services 2515924 15.94$ Mason Line Parks Dept Hotsy Equipment of Minnesota 25512 1,188.62$ Bulk Soap & Parts for Washbay Public Works Hugo Equipment Company 216741 10.99$ Parts - Unit #459 Parks Dept Hugo Equipment Company 216741 10.99$ Parts - Unit #462 Parks Dept Hugo Equipment Company 216768 10.07$ Parts - Unit #465 Parks Dept Hugo Equipment Company 216872 552.49$ Backpack Blower - Unit #481 Parks Dept Hugo Equipment Company 216872 492.99$ Backpack Blower - Unit #486 Parks Dept Hugo Equipment Company 216872 39.99$ Trimmer Line Parks Dept Hugo Equipment Company 216872 35.98$ Small Engine Oil Parks Dept Hugo Equipment Company 216986 39.99$ Trimmer Line Parks Dept Hugo Equipment Company 217335 203.95$ Parts - Unit #338-17 Parks Dept Hugo Feed Mill 179083 33.94$ Hardware - PPP Fire Pit Parks Dept Hugo Feed Mill 179346 8.99$ Masking Tape Parks Dept Hugo Feed Mill 180657 37.98$ Shut Off Valves (2) Public Works Innovative Office Solutions LLC IN4846892 237.47$ Copy Paper Administration Innovative Office Solutions LLC IN4846892 159.22$ Breakroom Supplies Gen Gov't Bldgs Innovative Office Solutions LLC IN4846892 37.83$ Trash Can Liners (CH) Gen Gov't Bldgs Innovative Office Solutions LLC IN4846892 29.80$ Tape Administration Innovative Office Solutions LLC IN4846892 8.48$ Glass Cleaner Gen Gov't Bldgs Innovative Office Solutions LLC IN4847919 165.08$ Restroom Supplies (PPP) Parks Dept Innovative Office Solutions LLC IN4850100 220.52$ Restroom Supplies (PPP) Parks Dept Innovative Office Solutions LLC IN4850100 123.04$ Mop Bucket & Mop (Oneka Room) Gen Govt Bldgs Innovative Office Solutions LLC IN4850100 40.17$ Trash Can Liners (PPP) Parks Dept Innovative Office Solutions LLC IN4850100 27.20$ Air Duster Administration Innovative Office Solutions LLC IN4850100 19.70$ Mop (PPP) Parks Dept Innovative Office Solutions LLC IN4857491 133.96$ Restroom Supplies (PPP) Parks Dept Innovative Office Solutions LLC IN4864754 251.48$ Restroom Supplies (PPP) Parks Dept Innovative Office Solutions LLC SCN-132176 (25.48)$ Binder Clips (Returned) Administration Instrumental Research, Inc. 6353 125.00$ Water Bacteria Testing Water Utility Jefferson Fire & Safety Inc IN327120 697.26$ Stat-X Handheld Fire Suppression System Fire Dept John Deere Financial 10507531 2,079.43$ Parts - Unit #317-06 Street Dept Kath Fuel Oil Service Co. 12320094 5,646.49$ May Unleaded Gas & Diesel Purchases Various Klein, Lori May 1,085.00$ May Cleaning Services (PPP) Parks Dept Klein, Lori June 805.00$ June Cleaning Services (PPP) Parks Dept Klein, Matthew CLAIM 156.73$ Work Boot Reimbursement Street Dept L.T.G. Power Equipment 293966 66.94$ Parts - Unit #344-20 Parks Dept L.T.G. Power Equipment 294830 18.71$ Parts - Unit #449 Parks Dept Landform 36672 281.96$ Residential Zoning Code Update Planning & Zoning Laughlin's Pest Control 71821 100.68$ June Pest Control Service Gen Gov't Bldgs Lawson Products 9312560344 42.80$ Bulk Hardware Supplies Public Works Lebens Floral & Garden 11077 3,950.00$ Lions Park Pavilion Planters Parks Dept Lebens Floral & Garden 11077 280.00$ Landscaping Supplies Gen Gov't Bldgs Lincoln National Life Insurance Co. June 1,200.47$ Disability Premium Finance Dept Lincoln National Life Insurance Co. July 1,200.47$ Disability Premium Finance Dept LRS Portables of Minnesota MP274042 128.00$ Toilet Rental - Oneka Park Parks Dept LRS Portables of Minnesota MP274043 128.00$ Toilet Rental - Beaver Ponds Park Parks Dept LRS Portables of Minnesota MP274044 128.00$ Toilet Rental - Diamond Point Park Parks Dept LRS Portables of Minnesota MP274045 128.00$ Toilet Rental - Frog Hollow Parks Dept LRS Portables of Minnesota MP274046 256.00$ Toilet Rental - Hanifl Park West Parks Dept LRS Portables of Minnesota MP274047 128.00$ Toilet Rental - Valjean Park Parks Dept LRS Portables of Minnesota MP274048 128.00$ Toilet Rental - Arbre Park Parks Dept LRS Portables of Minnesota MP274049 128.00$ Toilet Rental - Heritage Ponds Park Parks Dept LRS Portables of Minnesota MP274050 128.00$ Toilet Rental - McCollar Park Parks Dept LRS Portables of Minnesota MP274051 128.00$ Toilet Rental - Arcand Park Parks Dept LRS Portables of Minnesota MP274052 68.00$ Toilet Rental - Irish Ave Park Parks Dept LRS Portables of Minnesota MP274053 256.00$ Toilet Rental - Hanifl Park East Parks Dept Marco INV13937215 68.86$ June Copier Maintenance Building Inspections Menards 57982 35.96$ Part & Tool Organizers Parks Dept Menards 57982 16.50$ Shop Supplies Public Works Menards 58067 50.87$ Shelving Public Works Menards 58067 11.00$ Shop Supplies Public Works Menards 58660 211.66$ Fire Department Supplies Fire Dept Menards 58660 47.92$ Water Softener Salt Fire Dept Menards 58887 279.92$ City Hall Outdoor Lighting Gen Gov't Bldgs Menards 58949 75.98$ Good Neighbor Days Supplies Parks Dept Menards 58949 7.96$ Cleaning Supplies Public Works Menards 58953 89.70$ Wasp & Hornet Spray Parks Dept Menards 58953 20.77$ Supplies - CSAH 8 Monument Sign Street Dept Menards 58953 4.58$ Supplies - Lift Station No. 2 Sewer Utility Menards 59713 23.34$ Caulk - Water Tower No. 3 Water Utility Page 2 City of Hugo Claims July 7, 2025 G. 1 Vendor Invoice Amount Description Department Menards 59713 19.95$ Shelving Public Works Menards 59713 3.99$ Parts Organizer Parks Dept Metering & Technology Solutions INV8135 6,467.77$ Water & Meters & Hardware Water Utility Metro-INET 2720 11,627.00$ June Computer Service Various Metropolitan Area Management Assoc 2294 35.00$ MAMA Meeting Registration - Bryan Bear Administration Minnesota Cleaning Services Inc 0625HH01 788.67$ May Cleaning Services Gen Gov't Bldgs Minnesota Cleaning Services Inc 0625HH02 119.99$ May Cleaning Services - Hanifl Parks Dept Minnesota Cleaning Services Inc 0625HH03 780.00$ May Cleaning Services - PW Facility Public Works Minnesota Cleaning Services Inc 0625HH03 485.33$ May Cleaning Services Fire Dept Minnesota Cleaning Services Inc 0625HH03 260.00$ May Cleaning Services - Rice Lake Room Gen Gov't Bldgs Minnesota State Fire Chiefs Association 210 250.00$ 2025 Conference Registration - Hoernemann Fire Dept Minnesota State Fire Chiefs Association 212 250.00$ 2025 Conference Registration - Brauner Fire Dept MN Fire Service Certification Board 14146 262.00$ FFI/FFII Certification Exam - C. Bieniek Fire Dept MN Fire Service Certification Board 14146 262.00$ FFI/FFII Certification Exam - Brauner Fire Dept MN Fire Service Certification Board 14146 262.00$ FFI/FFII Certification Exam - Pieper Fire Dept Municipal Emergency Services Inc - MES IN2283778 3,082.28$ Wildland Coats & Pants (3 Sets) Fire Dept Olson Power & Equipment Inc P21560 658.85$ Parts - Unit #320-07 Parks Dept Olson Power & Equipment Inc P21805 144.11$ Parts - Unit #320-07 Parks Dept Olson Power & Equipment Inc P21875 115.02$ Parts - Unit #320-07 Parks Dept Olson Power & Equipment Inc P21875 159.50$ Parts - Unit #320-07 Parks Dept Olson Power & Equipment Inc P21977 (638.60)$ Parts - Unit #320-07 (Returned) Parks Dept O'Reilly Auto Parts 5914-334692 96.89$ Parts - Unit #304-23 Street Dept O'Reilly Auto Parts 5914-334692 96.89$ Light Bar - Unit #351-25 Stormwater Fund O'Reilly Auto Parts 5914-335457 4.98$ Parts - Unit #9101 Fire Dept O'Reilly Auto Parts 5914-335526 9.24$ Parts - Unit #9106 Fire Dept Oxygen Service Company 3618367 141.94$ Welding Supplies Public Works Peterson Companies 59595 653.00$ Waters Edge Irrigation Reuse Phase 1 Start Up Stormwater Fund Peterson Companies 59595 653.00$ Waters Edge Irrigation Reuse Phase 2 Start Up Stormwater Fund Peterson Companies 59598 480.00$ Hanifl Park Irrigation Repairs Parks Dept Peterson Companies 59686 1,750.24$ Beaver Ponds Park Irrigation Reuse System Start Up & Repairs Stormwater Fund Peterson Companies 59692 909.83$ CSAH 8 Irrigation Reuse System Start Up & Repairs Stormwater Fund Peterson Companies 59990 444.88$ City Hall Irrigation Start Up & Repairs Gen Gov't Bldgs Peterson Companies 59992 2,086.02$ Lions Park Irrigation Start Up & Repairs Parks Dept Peterson Companies 59993 2,081.28$ CSAH 8 Irrigation System Start Up & Repairs Street Sept Peterson Companies 60055 1,668.02$ CSAH 8 Irrigation System Start Up & Repairs Street Dept Pomp's Tire Service Inc 2320015768 647.66$ Service Call & Tire Repairs - Unit #317-06 Street Dept Press Publications 833773 500.00$ Golden Spike Sponsorship Parks Dept Press Publications 835834 36.73$ Consumer Confidence Report Notice Water Utility Press Publications 836651 73.45$ Planning Commission Public Hearing Notice Ordinances/Proceedings Pye-Barker Fire & Safety IVN00339981 471.75$ Tech Labor - Lions Park Pavilion Alarm System Parks Dept Ricoh USA, Inc 109267333 194.61$ July Copier Lease Payment Public Works Ricoh USA, Inc 5071476029 109.30$ Overage Charges (Color) Public Works Ricoh USA, Inc 5071476029 18.56$ Overage Charges (B & W) Public Works Sam's Club 84411 820.50$ Fire Department Supplies Fire Dept SealTech Inc 1511 16,425.00$ Rout & Seal Cracks Street Dept SealTech Inc 1512 25,578.00$ Rout & Seal Cracks Street Dept Sensible Land Use Coalition 3433 58.00$ Meeting Registration - Juba Planning & Zoning Sensible Land Use Coalition 3433 58.00$ Meeting Registration - Gort Planning & Zoning Sensible Land Use Coalition 3460 58.00$ Meeting Registration - Juba Planning & Zoning Sensible Land Use Coalition 3460 58.00$ Meeting Registration - Denaway Parks Dept Shred Right 48500 1,600.00$ Shredding Event Recycling Signature Lighting Inc 1502 320.00$ Streetlight Repairs Street Dept Signature Lighting Inc 1506 1,640.00$ Streetlight Underground Locates (Heritage Pkwy & Empress Dr) Street Dept Signature Lighting Inc 1510 790.00$ Streetlight Repairs Street Dept SiteOne Landscape Supply LLC 154092107-001 236.94$ Grass Seed (Plow Damage) Street Dept SiteOne Landscape Supply LLC 154618231-001 64.33$ Irrigation Multi-Tool Parks Dept SiteOne Landscape Supply LLC 154618286-001 63.18$ Irrigation Hardware Parks Dept SiteOne Landscape Supply LLC 154823244-001 1,136.50$ Irrigation Hardware Parks Dept SiteOne Landscape Supply LLC 155010334-001 183.16$ Irrigation Hardware Parks Dept SiteOne Landscape Supply LLC 155247264-001 40.92$ Irrigation Hardware Parks Dept Slack Painting LLC 2111 12,000.00$ Water Tower No. 4 Tank Cleaning Water Utility Smith, Schafer & Associates 42225 1,200.00$ 2024 Audit Interim Billing Finance Dept Smith, Schafer & Associates 42225 2,200.00$ Accounting Assistance Finance Dept Stabner Electric LLC 4997 130.50$ Electrical Work - CH Restroom Light Gen Gov't Bldgs Sylva Corporation Inc 90070 1,440.00$ SoftStep Mulch - Arcand Park Various Sylva Corporation Inc 90070 4,068.00$ SoftStep Mulch - Beaver Ponds Park Parks Dept Sylva Corporation Inc 90070 2,736.00$ SoftStep Mulch - McCollar Park Parks Dept Sylva Corporation Inc 90070 2,520.00$ SoftStep Mulch - Oak Shore Park Parks Dept Sylva Corporation Inc 90070 1,800.00$ SoftStep Mulch - Frog Hollow Park Parks Dept Sylva Corporation Inc 90070 2,916.00$ SoftStep Mulch - Heritage Park Parks Dept Sylva Corporation Inc 90070 576.00$ SoftStep Mulch - Hanifl Park Parks Dept TASC IN3454938 50.00$ July Cobra Administration Fee Finance Dept T-Mobile 870254054 473.11$ Cellular Phone Charges Various T-Mobile 870254054 21.97$ Tower No. 4/Well No. 6 Cradlepoint Water Utility T-Mobile 870254054 21.97$ Rice Lake Centre Cradlepoint Administration T-Mobile 870254054 40.25$ Hanifl Cradlepoint Parks Dept T-Mobile 870254054 473.11$ Cellular Phone Charges Various Page 3 City of Hugo Claims July 7, 2025 G. 1 Vendor Invoice Amount Description Department T-Mobile 870254054 21.97$ Tower No. 4/Well No. 6 Cradlepoint Water Utility T-Mobile 870254054 21.97$ Rice Lake Centre Cradlepoint Administration T-Mobile 870254054 40.25$ Hanifl Cradlepoint Parks Dept Toshiba Financial Services 5034390552 148.74$ June Copier Lease Payment Fire Dept Toshiba Financial Services 5034390552 17.67$ Overage Charges (Color) Fire Dept Toshiba Financial Services 5034390552 1.70$ Overage Charges (B & W) Fire Dept Toshiba Financial Services 5034768940 148.74$ July Copier Lease Payment Fire Dept Toshiba Financial Services 5034768940 22.95$ Overage Charges (Color) Fire Dept Toshiba Financial Services 5034768940 1.68$ Overage Charges (B & W) Fire Dept Town of May 6/10/2025 2,324.38$ Dust Control - Keystone Avenue (1/2) Street Dept Trade Press Inc 43406 223.00$ Willow Control Trail Signs Parks Dept TreviPay/Northern Tool bcbb0e72 84.99$ Pressure Washer Hose Public Works TruGreen 6/10/2025 698.15$ 2025 Service Agreement - Oneka Prairie Park Parks Dept UniFirst Corporation 1410144881 305.46$ Uniforms, Supplies & Floor Mat Services (PW) Public Works UniFirst Corporation 1410146523 16.18$ Restroom Supplies & Floor Mat Services (CH) Gen Gov't Bldgs UniFirst Corporation 1410146544 123.67$ Uniforms, Supplies & Floor Mat Services (PW) Public Works UniFirst Corporation 1410148098 129.97$ Uniforms, Supplies & Floor Mat Services (PW) Public Works UniFirst Corporation 1410149652 28.31$ Restroom Supplies & Floor Mat Services (CH) Gen Gov't Bldgs UniFirst Corporation 1410149672 123.67$ Uniforms, Supplies & Floor Mat Services (PW) Public Works UniFirst Corporation 1410150782 16.05$ Restroom Supplies & Floor Mat Services (CH) Gen Gov't Bldgs UniFirst Corporation 1410151092 125.67$ Uniforms, Supplies & Floor Mat Services (PW) Public Works US Bank Equipment Finance 557453081 557.03$ June Copier Service Payment Administration US Bank Equipment Finance 557453081 44.52$ Overage Charges (Color) Administration Verizon Wireless 6114279214 23.40$ Cellular Phone Charges Public Works Verizon Wireless 6114279215 80.08$ Cellular Phone Charges Fire Dept Verizon Wireless 6114910070 851.52$ Cellular Phone Charges Various Visu-Sewer, Inc 39083 24,438.75$ Televising - Beaver Ponds Street Improvement Project Street Reconstruction Visu-Sewer, Inc 37169 1,080.00$ Televising - Heritage Parkway Improvement Project (Add'l) Street Reconstruction Washington County 230805 111,483.49$ 2025 Assessing Fee Assessor White Bear Locksmith 35796 150.00$ Strike Plate Repairs - Lions Pavilion Parks Dept WSB & Associates March 87,507.75$ Engineering Fees - See Attached Breakdown Various WSB & Associates April 60,451.53$ Engineering Fees - See Attached Breakdown Various 299,773.51$ Total Claims for July 7, 2025 Page 4 Project Budget Tracking For the period 3/1/2025 - 3/31/2025 Project Name WSB Project # Project Manager Current Invoice Fee Type JTD Billed Budget Comments Client Invoice Reviewer HUGO - 2024 125th Street and Dellwood Ridge Neighborhood Street Improvement Project Erichson, Mark 2,547.50 299,281.60 315,167.00 Anderson, Scott HUGO - 2025 Beaver Ponds Area Street Improvement Project Erichson, Mark 6,339.75 88,593.25 164,297.00 Anderson, Scott HUGO - 2025 Duck Pass, Palme Long Lake Estate, and Ingersoll Neighborhood Improvement Project Erichson, Mark 11,523.50 87,541.75 178,177.00 Anderson, Scott HUGO - 2025 General Engineering Services Erichson, Mark 5,746.75 21,069.00 86,813.76 Bear, Bryan HUGO - 2025 GIS Services Pittman, Bryan 584.00 996.00 12,265.00 Bear, Bryan HUGO - 2025 LGU Services Havranek, Anthony 760.00 1,617.00 20,538.00 Juba, Rachel HUGO - 2026 Bald Eagle Industrial Park Area Street Improvement Project Erichson, Mark 26,522.50 26,522.50 327,888.42 Anderson, Scott HUGO - Fable Hill Bridge Erichson, Mark 16,682.50 36,786.25 36,019.00 Anderson, Scott HUGO - Forest Road Bridge Erichson, Mark 5,785.50 18,871.50 7,000.00 Anderson, Scott HUGO - Frenchman Place 5th Addition Erichson, Mark 1,036.50 9,389.75 Juba, Rachel HUGO - Lead Service Line Assistance Erichson, Mark 74.00 6,019.66 6,500.00 Anderson, Scott HUGO - Meadows at Hugo Erichson, Mark 330.00 113,632.75 Juba, Rachel HUGO - Meadows at Hugo - 2nd Addition Erichson, Mark 1,198.75 20,311.75 Juba, Rachel HUGO - Oneka Prairie Erichson, Mark 66.00 47,230.25 Juba, Rachel HUGO - Shores of Oneka Lake Erichson, Mark 3,623.50 126,112.65 Juba, Rachel HUGO - Shores of Oneka Lake 5th Keller, Kris 1,241.00 1,241.00 7,304.00 Juba, Rachel HUGO - Shores of Oneka Lake Apartments Erichson, Mark 1,641.00 7,274.25 Juba, Rachel HUGO - TH 61 and 159th Roundabout Erichson, Mark 264.00 157,763.00 164,450.00 Juba, Rachel HUGO - Watercrest of Hugo 1st and 2nd Erichson, Mark 1,541.00 24,908.00 Juba, Rachel Final Totals $ 87,507.75 $ 1,079,745.25 $ 1,070,236.86 R-023540-000 Hourly R-026749-000 Hourly R-026750-000 Hourly R-027763-000 Hourly R-026673-000 Hourly R-026760-000 Hourly R-028436-000 Not to Exceed R-023811-000 Hourly R-022684-000 Hourly R-024864-000 Hourly R-025065-000 Hourly R-013597-000 Hourly R-020790-000 Hourly R-020725-000 Hourly R-019275-000 Hourly R-028491-000 Hourly R-025989-000 Hourly R-022491-000 Hourly R-024088-000 Hourly Page 1 of 1 Project Budget Tracking For the period 4/1/2025 - 4/30/2025 Project Name WSB Project # Project Manager Current Invoice Fee Type JTD Billed Budget Comments Client Invoice Reviewer HUGO - 165th Street Area Study Harwood, Alison $ 1,920.50 Not to Exceed $ 1,920.50 $ 142,200.00 Juba, Rachel HUGO - 2024 125th Street and Dellwood Ridge Neighborhood Street Improvement Project Erichson, Mark $ 2,167.00 Hourly $ 301,448.60 $ 315,167.00 Anderson, Scott HUGO - 2025 Beaver Ponds Area Street Improvement Project Erichson, Mark $ 3,062.75 Hourly $ 91,656.00 $ 164,297.00 Anderson, Scott HUGO - 2025 Duck Pass, Palme Long Lake Estate, and Ingersoll Neighborhood Improvement Project Erichson, Mark $ 2,320.75 Hourly $ 89,862.50 $ 178,177.00 Anderson, Scott HUGO - 2025 General Engineering Services Erichson, Mark $ 6,543.03 Hourly $ 27,612.03 $ 86,813.76 Bear, Bryan HUGO - 2025 GIS Services Pittman, Bryan $ 4,351.50 Hourly $ 5,347.50 $ 14,765.00 Bear, Bryan HUGO - 2025 LGU Services Havranek, Anthony $ 327.00 Hourly $ 1,944.00 $ 20,538.00 Juba, Rachel HUGO - 2026 Bald Eagle Industrial Park Area Street Improvement Project Erichson, Mark $ 9,762.00 Not to Exceed $ 36,284.50 $ 327,888.42 Anderson, Scott HUGO - Fable Hill Bridge Erichson, Mark $ 8,752.00 Hourly $ 45,538.25 $ 36,019.00 Anderson, Scott HUGO - Forest Road Bridge Erichson, Mark $ 4,575.75 Hourly $ 23,447.25 $ 7,000.00 Anderson, Scott HUGO - Frenchman Place 5th Addition Erichson, Mark $ 3,999.25 Hourly $ 13,389.00 $ - Juba, Rachel HUGO - Lead Service Line Assistance Erichson, Mark $ 74.00 Hourly $ 6,093.66 $ 6,500.00 Anderson, Scott HUGO - Meadows at Hugo Erichson, Mark $ 3,872.25 Hourly $ 117,505.00 $ - Juba, Rachel HUGO - Meadows at Hugo - 2nd Addition Erichson, Mark $ 856.25 Hourly $ 21,168.00 $ - Juba, Rachel HUGO - Meadows at Hugo-Wetland Replacement Monitoring Havranek, Anthony $ 218.00 Not to Exceed $ 6,457.75 $ 22,298.00 Juba, Rachel HUGO - Oneka Prairie Erichson, Mark $ 66.00 Hourly $ 47,296.25 $ - Juba, Rachel HUGO - Shores of Oneka Lake Erichson, Mark $ 1,752.50 Hourly $ 127,865.15 $ - Juba, Rachel HUGO - Shores of Oneka Lake 4th Erichson, Mark $ 132.00 Hourly $ 4,423.00 $ - Juba, Rachel HUGO - Shores of Oneka Lake 5th Keller, Kris $ 1,655.00 Hourly $ 2,896.00 $ 7,304.00 Juba, Rachel HUGO - Shores of Oneka Lake Apartments Erichson, Mark $ 396.00 Hourly $ 7,670.25 $ - Juba, Rachel HUGO - TH 61 and 159th Roundabout Erichson, Mark $ 2,060.00 Hourly $ 159,823.00 $ 164,450.00 Juba, Rachel HUGO - Watercrest of Hugo 1st and 2nd Erichson, Mark $ 1,588.00 Hourly $ 26,496.00 $ - Juba, Rachel Final Totals $ 60,451.53 R-028899-000 R-023540-000 R-026749-000 R-026750-000 R-026760-000 R-026673-000 R-027763-000 R-023811-000 R-028436-000 R-024864-000 R-022684-000 R-013597-000 R-025065-000 R-024088-000 R-022491-000 R-025989-000 R-028491-000 R-025586-000 R-019275-000 R-020725-000 R-019767-000 R-020790-000 Page 1 of 1 14669 Fitzgerald Avenue North, Hugo, MN 55038 • (651) 762-6300 • www.ci.hugo.mn.us TO: Honorable Mayor Tom Weidt and Members of the City Council FROM: Anna Wobse, Finance Director SUBJECT: Firefighter’s Relief Association Pension Increase, Deferred Interest Rate and Bylaw Revisions DATE: For the City Council Meeting of July 7, 2025 DESIRED COUNCIL ACTION Motion to Ratify the Board of Trustees Request for a $500 Increase in the Lump-Sum Pension Benefit Motion to Ratify the 5% Interest Rate for Deferred Members Motion to Ratify Revised Bylaws OPTIMUM PENSION BENEFIT LEVEL On April 2, 2012, the City Council adopted a Resolution Adopting the Firefighter Relief Pension Fiscal Policy. The policy sets the optimum pension benefit level as the average lump-sum benefit provided by relief associations that receive state fire aid within 10% of the amount received by the Hugo Firefighter’s Relief Association, as last reported by the Office of the State Auditor. According to the Office of the State Auditor, thirteen other lump-sum relief associations received state fire aid in 2024 within 10% of the amount received by Hugo. Four are historical comparisons: Waconia, Ham Lake, Little Falls and Albertville. Four are comparable associations that joined the list last year: Bayport, Willmar, Sartell and Detroit Lakes. Hugo’s continued growth in both population and market value leads to increased state fire aid allotments and brings five new associations within the 10% range. These include: Lake Elmo, Hopkins, Red Wing, Grand Rapids and Sauk Rapids. Many of the newer comparable associations have benefit levels significantly higher than those of the historical comparable associations. Using data from these thirteen associations, staff can establish the optimum pension benefit level at $6,754 per year of service. With the addition of the new comparable relief associations, the optimum benefit level is $1,654 above the current benefit amount. A noticeable gap between the current pension level and the optimum level was already evident last year, prompting staff to recommend reaching the average through multi-year step increases. This phased approach is fiscally responsible, as large annual increases in liabilities could trigger a required City contribution to the Association. In 2024, the pension was increased by $500, and staff recommends another immediate increase of $500. The Relief Association voted to increase their lump-sum pension benefit from $5,100 per year of service to $5,600 per year of service and is asking the City Council to ratify this increase as well as approve a revision to the bylaws incorporating this new benefit level. FINANCIAL STATISTICS The Finance Department has reviewed the financial status of the Relief Association and finds that the recommended increase will result in the following: Total Pension Assets: $3,290,508 (projected) Total Pension Liability: $1,969,234 (after $500 increase) Projected Surplus: $1,321,274 (67% of liability) The attached projections show that the investment portfolio can withstand a 35% market correction while still maintaining a surplus. Page 2 DEFERRED INTEREST RATE The Office of the State Auditor recently issued guidance stating that, in order for deferred members to be credited with interest, the rate must be approved by a relief association’s board of trustees and ratified by the affiliated municipal governing board. Section 16.2 of the Hugo Firefighter’s Relief Association’s Bylaws specifies that the Association shall add to the deferred member's account, interest, at the rate of five percent (5%) compounded annually. The Relief Association voted to maintain the 5% interest rate for deferred members as currently stated in the bylaws and is asking the City Council to ratify the interest rate received by deferred members. BYLAW REVISIONS The Hugo Firefighter’s Relief Association recently hosted a training session presented by Ed Hoffman from the Minnesota State Fire Department Association. Members of Hugo’s Board, along with representatives from surrounding associations participated in the training session. Best practices were reviewed, and updates were provided on state statutes. Trustee Bob Bieniek had undertaken the detailed task of reviewing the current bylaws and identifying omissions, corrections and statute updates needed. Sections were revised to reflect statutory changes, language updates were made, and officer salaries were increased. The Relief Association voted to update the bylaws as presented and is asking the City Council to ratify the revisions to the bylaws. RECOMMENDATION Staff is recommending the City Council: 1. Approve a motion to ratify the Board of Trustees request for a $500 increase in the lump-sum pension benefit and approve a change to the bylaws incorporating this new benefit level 2. Approve a motion to ratify the 5% interest rate received by deferred members 3. Approve a motion to ratify the revisions to the bylaws ATTACHMENTS Letter from Dave Jensen, President of the Board of Trustees Relief Association Comparisons Financial Projections Complete Copy of the Hugo Firefighter’s Relief Association Bylaws (revisions in red) Hugo FireFigHter’s relieF AssociAtion 5323 140tH street nortH Hugo, MinnesotA 55038 (651) 429-6366 Hugo Firefighter’s Relief Association TO: Anna Wobse, Finance Director FROM: Dave Jensen, President DATE: June 26th 2025 SUBJECT: Pension Increase, Deferred Interest Rate and Bylaw Revisions Please be advised that the Board of Trustees voted to increase the lump sum pension benefit from $5,100 per year of service to $5,600 effective June 24th 2025, this increase will not require a municipal contribution in calendar year 2025. The Office of the State Auditor recently issued guidance stating that, in order for deferred members to be credited with interest, the rate must be approved by a relief association’s board of trustees. To be in compliance with this new mandate, the general membership voted to maintain the 5% interest rate earned by deferred members as currently stated in the bylaws. Additionally, the general membership approved some language updates to the bylaws. This includes updating statutes and an increase in officer salaries. In keeping with past practice, this increase, the deferred member interest rate and bylaw revisions should be ratified by the City Council. Please place this item on an upcoming City Council agenda for ratification. Dave Jensen, President Lump Sum Plans Only Name 2024 Fire Aid Variable 2023 Lump Sum 1 Lake Elmo Fire Department $145,483.70 -5.97%$5,850.00 2 Waconia Fire Department $148,723.38 -3.88%$5,700.00 3 Ham Lake Fire Department $149,291.83 -3.51%$5,000.00 4 Little Falls Fire Department $154,539.78 -0.12%$4,900.00 Hugo Fire Department $154,719.84 0.00% 5 Bayport Fire Department $158,489.89 2.44%$10,000.00 6 Hopkins Fire Department $159,240.82 2.92%$8,400.00 7 Red Wing Fire Department $159,266.44 2.94%$9,000.00 8 Willmar Fire Department $159,885.63 3.34%$6,000.00 9 Sartell Fire Department $160,860.02 3.97%$5,150.00 10 Detroit Lakes Fire Department $161,949.26 4.67%$10,300.00 11 Albertville Fire Department $162,669.94 5.14%$4,200.00 12 Grand Rapids Fire Department $164,066.11 6.04%$6,500.00 13 Sauk Rapids Fire Department $168,593.68 8.97%$6,800.00 Average (not including Hugo)$6,753.85 Lowest $4,200.00 Highest $10,300.00 State-Wide Average $2,594.44 Based on the adopted formula, the optimum pension benefit level for the Relief Association is: $6,753.85 per year of service $5,100.00 Hugo's Current Level $500.00 Proposed Increase $5,600.00 Proposed Level Relief Association Comparisons OPTIMUM PENSION BENEFIT LEVEL Firefighter's Relief Projections Benefit Total Investments Estimated Market Projected Surplus Funding Cash In Fund 226 Level Active Deferred Liability at 01/01/2025 State Aid Appreciation Assets (Deficit)Ratio at 01/01/2025 5,600$ 951,950$ 1,017,284$ 1,969,234$ 3,135,789$ 154,720$ -$ 3,290,508$ 1,321,274$ 167%251,999$ 5,600$ 951,950$ 1,017,284$ 1,969,234$ 3,135,789$ 154,720$ (783,947)$ 2,506,561$ 537,327$ 127% 5,600$ 951,950$ 1,017,284$ 1,969,234$ 3,135,789$ 154,720$ (1,097,526)$ 2,192,982$ 223,748$ 111% 5,600$ 951,950$ 1,017,284$ 1,969,234$ 3,135,789$ 154,720$ (1,411,105)$ 1,879,404$ (89,830)$ 95% Projected Surplus (Deficit) at $5,600 Benefit Level Liability Projected Surplus (Deficit) With 25% Market Correction Projected Surplus (Deficit) With 35% Market Correction Projected Surplus (Deficit) With 45% Market Correction 1 Hugo Firefighter’s Relief Association Bylaws Bylaws approved by membership June 28th 2022, November 17, 2023 June 24, 2025 Revised:,2018, 2019,2021, 2022, 2023, 2024, 2025 2 ARTICLE I NAME Section 1.1. Name. The name of the association is the Hugo Firefighter’s Relief Association. ARTICLE II PURPOSE Section 2.1. Purpose. This instrument constitutes the Bylaws of the Hugo Firefighter’s Relief Association, hereinafter referred to as “Association,” adopted for the purpose of regulating and managing the internal affairs of the corporation and shall serve as the written pension plan for the relief association. The Association is a governmental entity that receives and manages public money to provide retirement benefits for individuals providing the governmental services of firefighting. The objectives of the plan shall be to provide service pensions and ancillary benefits to members and dependeants of the Hugo Fire Department, hereinafter "Fire Department". All benefits issued by this association shall be governed by these bylaws and Federal and State laws. ARTICLE III EffEctivENESS Section 3.1. Effectiveness: This document when approved by a majority of the membership present and voting by roll call vote shall supersede any previous versions of the Hugo Firefighter’s Relief Associations bylaws, policies, or past precedence’s set by the membership, or the Board of Trustees. ARTICLE IV DEfiNitiONS Section 4.1. Surviving spouse. The term "surviving spouse" means the spouse of a deceased member who was legally married to the member at the time of death Section 4.2. Fiduciary responsibility. In the discharge of their respective duties, the officers and trustees shall be held to the standard of care and all other statutory requirements enumerated in Minn. Stat. § 356A. No trustee of the Association shall cause the relief association to engage in a transaction, if the fiduciary knows or should know that a transaction constitutes one of the following direct or indirect transactions. (1) sale or exchange or leasing of any real property between the relief association and a board member; (2) lending of money or other extension of credit between the relief association and a board member or member of the relief association; 3 (3) furnishing of goods, services, or facilities between the relief association and a board member; or (4) transfer to a board member, or use by or for the benefit of a board member, of any assets of the relief association. Transfer of assets does not mean the payment of relief association benefits or administrative expenses permitted by law. Section 4.3. Beneficiary. Pursuant to Minn. Stat. 424A.05, the beneficiary under this plan, that is entitled to receive a benefit following the death of an active, disabled, deferred or early vested member. The benefit shall be the following persons, in the following succession: (1)The surviving spouse, if no surviving spouse, (2)The surviving child, and if no surviving child, (3)Any ancillary survivor's benefit shall be paid to the estate, as a funeral benefit. Section 4.4. Trustees. The individuals designated as such by Minn. Stat. §424A.04 and by virtue of elected office, those that qualify as the ex-officio trustees. Section 4.5. Ex-Officio Trustees. The Board of Trustees of the Relief Association as specified under Minn. Stat. §424A.04, shall have three Ex-Officio Trustees. The three Ex-Officio Trustees shall be the Chief of the fire department, One Elected City Official, and one City Staff Member. The City Official and City Staff Member shall formally be appointed annually by the City Council. Section 4.6. Breaks in Service. Any time during which the member does not receive credit for active service. Any member returning from a break in service must remain in active service equal in time to the break in service, up to a maximum of five years, in order to qualify for any pension increases having occurred during the time. If this requirement is not met prior to the individual's resignation, the retirement benefits will revert to those in effect at such time the break in service began. Section 4.7. Active Service. Active service shall be defined as meeting the requirements and certification of firefighter as determined by the City of Hugo, The EMSRB requirements and certifications for Emergency Medical Responder, and ability to perform those functions on behalf of the Hugo Fire Department. Active service shall also include going to, serving at, and returning by a direct route from: Fire calls, medical emergencies, fire prevention, regularly and specially ordered meeting, drills, training sessions, floods, storms, riots, and any natural or manmade disasters, national, regional or state fire schools, meetings, conferences or conventions, local celebrations or fundraising activities on behalf of the Hugo Fire Department or the Hugo Firefighters Relief Association. Active service shall also include fire suppression or fire supervision. Active service shall be certified by the Secretary of the Hugo Firefighters Relief Association upon application for retirement benefits. Section 4.8. Year of Active Service. For purposes of computing benefits, service pension’s payable or calculating vesting requirements, a year of active service shall be defined as: full compliance with the Hugo Firefighter’s Relief Association Bylaws, and maintaining minimum requirements as is listed in section 4.9, along with active status 4 within the Hugo Fire Department. Service pensions will be prorated for fractional years of service pursuant to Minn. Statue 424A.02, Subdivision 2, and these bylaws. Section 4.9 Membership Requirements: For the purpose of receiving benefits from this Association, each member must be in good standing with the fire department as defined by the City of Hugo Personnel Policy. Section 4.1110 Failure to meet the requirements: In the event a member does not meet the minimum requirements as listed in section 4.8 and section 4.9, a member will be notified of their delinquency and will have an opportunity to present their case to the Board of Trustees or general membershipFire Chief, as to why he/she should receive service credit for that calendar year. Board dDecisions of the Fire Chief will only apply to the member in dispute and does not set any precedence for any other members to fall back upon. Each case will be considered separate based on the merits provided. A member shall have the rights to appeal the decision of the Board to the membership final disposition.The Fire Chief will make the final determination on the disputed amount of active service credit to be awarded per Minnesota Statute 424A.003 (c) Section 4.1112. Reports of Active Service. On or before March 31 of each calendar year the Fire Chief shall certify to the Board of Trustees the amount of active service credit earned by each Member of the Association at the close of the previous calendar year. Every January, the Board of Trustees shall request a report from the Chief of the Fire Department, showing the total percentages for calls and drills from the previous calendar year for each member of the fire department. All reports given to the Board of Trustees are confidential, and any Board member divulging said information, shall be immediately terminated from their elected position. Section 4.1210. Reports of service credit: On February 1st of each year, Tthe Secretary of the AssociationFire Chief shall provide each member with an Annual Service Credit Certification report showing the total service credit earned from his\her inception into the Association to the close of theduring the previous calendar year. Members of the Association will have thirty (30) fourteen (14) days to file a dispute in writing of any inaccuracies to the Board of TrusteesFire Chief. After thirty (30) days following the distribution of service credit reports to each individual member, unless in dispute, the service credit report for each member shall stand as official record, for the purpose of pension credit. Section 4.13. Quarters: For the purpose of this document, a quarter shall be defined as three months. There shall be four quarters per calendar year. The first (1st) quarter shall begin on January 1st and conclude on March 31st. The second (2nd) quarter shall begin on April 1st and conclude on June 30th. The third (3rd) quarter shall begin on July 1st and conclude on September 30th and the fourth (4th) quarter shall begin on October 1st and conclude on December 31st. Section 4.13.1 Months: for the purpose of this document a month shall be considered as 5 a minimum of 2828 days. Section 4.13.2 Calendar Year: for the purpose of this document a calendar year shall be defined as twelve (12) months, beginning on January 1st and concluding on December 31st. Section 4.14. Fractional Years of Service Calculation: For the purpose of calculating service pension for fractional years of service, the total yearly benefit sum will be divided by twelve (12) months to give a monthly pension amount. Section 4.15. Domestic Relations Order: Any judgment, decree or order (including approval of a property settlement agreement) that complies with the provisions of Minn. Stat. §§518.58, 518.581, or 518.611, and is consistent with these bylaws and adopted by the Board of Trustees. Section 4.16. Classifications of Members: (1) Active Member. An active member is a person who has applied and been accepted for membership in the Association and is currently in active status on the fire department and has not been either suspended or expelled from the association. Active members may attend meetings, run for elected office and are entitled to voting rights within the Association. (2) Deferred Member. A person who is a member of the Association; and who has terminated from the Fire Department; and who has completed at least ten (10) years of active service in the Fire Department; and has not made application for his or her service pension, in accordance with section 13.2 of these bylaws. Deferred members, are not allowed to run for elected office, nor are they entitled to voting rights within the Association (3) Retired Member. A retired member is a member of the Association, who has terminated from the Fire Department, and has completed at least ten (10) years of active service in the fire department, and has made application for his or her pension but has not received final distribution of his or her pension in full. Retired members, are not allowed to run for elected office, nor are they entitled to voting rights within the Association Section 4.17. Subject to a waiver: for the purpose of this document, the term subject to a waiver shall mean a signed document authorizing this Association to notify a member of any meetings of the Association via electronic mail, fax, and text messaging. ARTICLE V MEMBERSHiP Section 5.1. Eligibility: Any active member of the Fire Department is eligible for membership in this Association. Upon acceptance of a new member's application, the active member shall receive credit for all time served on probation with the fire department prorated to the start date with the Fire Department. Section 5.2. Application for membership: Written application may be made at any 6 regular or special meeting of the Board of Trustees, or at any general membership meeting of the Association and must be approved by 51% of the membership present and voting. Section 5.3. Membership Termination: Resignation or expulsion from the Fire Department shall terminate membership of the member so resigning, expelled, or removing from the Hugo Firefighters Relief Association. Section 5.4. Suspension and Expulsion: Any member may be suspended or expelled from the Association for cause by a two-thirds (2/3) vote of the Association membership. Cause for expulsion includes but is not limited to, failure to account for money belonging to the Association or feigning illness or injury for the purpose of defrauding the Association. The member shall have the right to a hearing before a quorum of the Board of Trustees. Written notice via registered mail with return receipt will be sent to the individual at least 15 days prior to the hearing. Section 5.5. Reinstatement and Approval: Any member suspended or expelled by the Association can only be reinstated upon application for reinstatement in writing, presented at a regular or special meeting of the association, and approved by two-thirds (2/3) of the Association membership. Section 5.6. Leave of Absence: Leave of absence shall be granted to members for a reasonable length of time, not to exceed one (1) year upon submitting the member's written notice to the Secretary of the Association. A leave of absence from the Hugo Fire Department that is approved by the Hugo City Council shall be considered a leave of absence from the Association. The member shall receive a prorated monthly share of the year in which the leave of absence occurred. In no case, shall a member receive pension credit while on a leave of absence, other than those members on a leave of absence in accordance with Section 5.7 of these bylaws. If the approved leave of absence exceeds more than one (1) year and becomes an unapproved leave of absence as defined by section 5.8, the member shall not receive credit for a full year of active service for that year and subsequent years of absence. Such member, upon returning to the performance of active service, shall recommence membership in this association and adjustments shall be made to the total service credit of the member for subsequent full years of active service. Section 5.7. Military Leave: See Minnesota State Statue 424A.021 Section 5.8. Unapproved Leave of Absence: A leave of absence beyond one (1) year and any period of suspension will not count toward active service. Section 5.9. Voting: Each active member shall be entitled to one vote on any matter voted upon by the membership. Voting by proxy is not permitted. All votes, unless specified prior to the vote, shall be conducted by a voice vote. If a majority cannot be determined by voice vote, the Officer in charge of the vote shall ask for a show of hands. 7 ARTICLE VI BOARD Of tRUStEES Section 6.1. Board of Trustees: The Board of Trustees shall consist of nine (9) members, six (6) of whom shall be elected by the membership and three (3) of whom shall be Ex-Officio Trustees. A President, a Vice President, a Secretary, a Treasurer, and two (2) general trustees, shall be elected for a three-year term as specified in this Article, or until a successor has been elected and qualified. (1). Eligibility for Trustee Positions. A member seeking a Trustee position shall have a minimum two (2) years membership with the Association. (2). Filing for election. Any member wishing to hold an elected position on the Board of Trustees, and meets the requirements set forth herein, shall forward a letter of intent to the Secretary of the Association 30 calendar days prior to the election at the annual meeting. A listing of open position(s) will be posted no more than 45 calendar days prior to the elections at the annual meeting. (3). Nominations. Nominations will only be allowed in the event the Secretary has not received any letters of intent for an open position(s). (4). Elections. Any member eligible for a Trustee position shall be elected by a majority vote, by ballot, at the annual meeting of the Association. If more than one name is marked on any one ballot. The ballot will be discarded and not count. The President will announce the total number of ballots handed out, once voting has concluded, the president will announce the total number of ballots collected, the total number of ballots that have been discarded, and the total number of votes received for each candidate. Section 6.2. Terms: The terms of office of the general trustees and the officers shall be paired as follows: The two (2) general trustees; the President and The Treasurer; the Vice President and the Secretary. The term of the officers and general trustees shall be 3 years. The terms shall be staggered so that one pair shall be elected at each annual meeting. If a vacancy occurs during the term of office of any elected officer or general trustee, the general membership shall elect a member of the Association to serve for the unexpired term of the vacated position at the next regular or annual meeting of the Association. Section 6.3. Removal of Trustees: A general trustee or officer may be removed for cause. Cause for removal shall include, but shall not be limited to, the breach of the duties as set forth in Article VII of these bylaws. One or more of the trustees or officers may be removed at a meeting of the Association which has been called for that purpose by two-thirds (2/3) vote of the Association membership. Notice of the meeting at which removal is to be considered, shall be given to each member and shall include the purpose of the meeting. The general trustee or officer shall be furnished with a written statement via registered mail with return receipt of the particular charges at least 15 days before the 8 meeting is to be held. At the meeting, the general trustee or officer shall be given an opportunity to be fully heard as to each charge. If a general trustee of or officer is removed, a replacement shall be elected at the next regular or special meeting of the Association, and such replacement shall serve out the unexpired term of the removed general trustee or officer. Section 6.4. Fiduciary Duty: The members of the board shall act as trustees with a fiduciary obligation to the members of the Association, to the City of Hugo, and to the State of Minnesota. Section 6.5. Meeting Expenses: The President of the Association shall be paid an annual amount of $500.001,000. The Secretary and Treasurer of the Association shall be paid an annual amount of $500.001,000. The Vice PresidentSecretary of the Association shall be paid an annual amount of $500. The President may designate a salary of up to $1000 to be paid annually to a person assisting the Board of Trustees in fulfilling the responsibilities as administrators of the special fund consistent with Minnesota Statute 424A.05 Subd. 3b(a)(2). Said amounts can be changed at any time by a majority of the membership present and voting at any regular or special meeting. Trustees of this Association may be reimbursed for reasonable expenses to attend their respective committee assignments, training sessions, conferences, and meetings where attendance is required. Section 6.6. Voting: At each meeting of the Board of Trustees, every member shall be entitled to vote in person but not by proxy. Each member shall have one (1) vote. All votes shall be conducted by roll call vote, if the item in question, has a fiscal note impact. All votes shall be documented in the minutes of the meeting. Section 6.7. Continuing Education Plan: AnnuallyDuring the period of their term of office, all trustees shall complete four (4) hours of continuing education, related to their duties per year, of which four (4) hours should come from attending state fire conferences, State fire Schools or courses approved by the President of the Association. A fifty ($50) dollar a day fee will be paid to all Board of Trustees that attend any required training as required by the State of Minnesota and in compliance with these bylaws. This fee is to be paid out only if the member is missing work to accomplish these required training hours. Additionally Trustees will be paid a per diem per day based on the federal per diem rates for the location the trustee is attending the training. All hotel costs will be reimbursed, mileage if personal vehicle is driven. ARTICLE VII DUtiES Of OfficER Section 7.1. President's Duties: It shall be the duty of the President to (a) attend and preside at the meetings of the Association and the Board of Trustees; (b) enforce the due observance of Minnesota State Statues, the Association’s Articles of Incorporation and the Bylaws; (c) see that the officers properly perform the duties assigned to them; (d) sign all checks issued by the Treasurer and all other papers which required his/her 9 signature; (e) Assign all committee appointments (f) exercise careful supervision over the affairs of the association, and (g) perform such other duties as may be assigned by the Board of Trustees or be required by law. It shall be the duty of the President to ensure completion of continuing education for the Trustees. (h) Attend sixty (60) percent of all Board of Trustee meetings. In the event that the President is unable to maintain the requirements listed in his/her duties, he/she shall resign and a new member shall be elected by the membership to fulfill the remaining term Section 7.2. Vice President's Duties: It shall be the duty of the Vice President to (a) perform the duties of the President in his/her absence. In the absence of both the President and the Vice President it shall be the duty of the Association to elect a President pro tem, who shall perform the duties incident to the office, and perform such other duties as may be assigned by the Board of Trustees or be required by law. (b) Attend sixty (60) percent of all Board of Trustee meetings (C) It shall be the duty of the Vice President to act as the liaison between the Association and any organized civic group doing business with the Association. (Example: Lions Club etc...) In the event that the Vice President is unable to maintain the requirements listed in his/her duties, he/she shall resign and a new member shall be elected by the membership to fulfill the remaining term Section 7.3. Secretary's Duties: It shall be the duty of the Secretary to (a) keep a true and accurate record of the proceedings of all meetings of the association and of the Board of Trustees; (b) keep a correct record of all amendments, alterations and additions to the Articles of Incorporation and Bylaws in a book separate from the minute books of the association; (c) cause due notice of all special meetings of the Association and of the Board of Trustees to be given; (d) receive all monies due the Association and pay the same over to the Treasurer, taking a receipt for the same, Failure to do so constitutes cause for purpose of removal under section 6.3 of the above bylaws and the Secretary may be expelled from the Association pursuant to the provisions of Article V; (e) keep a roll of membership, with the date of joining, resignation, discharge, leaves of absence, and relief or pensions furnished; (f) sign all orders for payment issued to the Treasurer, and joint with the Treasurer, prepare and file all reports and statements required by law. And (g) perform such other duties as may be assigned by the Board of Trustees or be required by law. The Secretary’s records shall be at all times open to inspection by the Board of Trustees. (h) Attend sixty (60) percent of all Board of Trustee meetings. In the event that the Secretary is unable to maintain the requirements listed in his/her duties, he/she shall resign and a new member shall be elected by the membership to fulfill the remaining term Section 7.4. Treasurer's Duties: It shall be the duty of the Treasurer to (a) receive from the Secretary all monies belonging to the Association and hold them subject to the order of the President and countersigned by the Secretary. (b) prepare a full and detailed statement of the assets and liabilities of each fund and present same to the Board of Trustees prior to their meetings and prior to the annual meeting of the Association; and (c) jointly with the Secretary prepare and file all reports and statements required by law, and (d) perform such other duties as may be assigned by the Board of Trustees or be 10 required by law and (e) ensure newly elected President, or Vice President set up a signature all relief association accounts Prior to entering upon the duties of his/her office, the Treasurer shall give a bond with such sureties as may be required and approved by the Board of Trustees, conditioned upon the faithful discharge and performance of the duties of his/her office. The amount of the bond will be equal to at least 10% of the assets of the Association; however, the amount of the bond need not exceed $500,000. Such bond shall be payable from the special fund of the Association. (e)Attend sixty (60) percent of all Board of Trustee meetings. In the event that the Treasurer is unable to maintain the requirements listed in his/her duties, he/she shall resign and a new member shall be elected by the membership to fulfill the remaining term Section 7.5. Trustee Duties: It shall be the duty of the elected trustee positions to (a) attend sixty (60) percent of all Board of Trustee meetings (b) participate in committee assignments (c) perform such other duties as may be assigned by the Board of Trustees or be required by law. In the event that the Trustee is unable to maintain the requirements listed in his/her duties, he/she shall resign and a new member shall be elected by the membership to fulfill the remaining term Section 7. 6. End of Term Duties: It shall be the duty of all officers to deliver to their successors in office, or any committee appointed by the Board of Trustees to receive the same, all monies, books, papers and other items pertaining to their respective offices within thirty (30) days upon the expiration of their terms of office. ARTICLE VIIi MEEtiNGS Section 8.1. Annual Meeting: The annual meeting of the Association for the election of officers and trustees, and other business shall take place in December. The place of the meeting shall be designated and may be changed from time to time by the Board of Trustees. Subject to waiver, written notice of the annual meeting shall be given to members at least 5 days in advance. Section 8.2. Board of Trustees Meetings: The Board of Trustees, must meet at least six (6) times during the calendar year. Subject to waiver, a notice of every Board of Trustees meeting shall be sent or delivered by the Secretary to all Trustees, and Ex-Officio Trustees, at least five (5) days before the meeting, excluding the date of the meeting. Such notice shall set forth the date, place, and time of the meeting. Section 8.3 .Regular meeting of the Association: In addition to the annual meeting, there shall be a minimum of three (3) regular meetings of the Association each calendar year. Section 8.4. Special Meetings of the Board of Trustees: Special meetings of the Board of Trustees may be called by the President along with one (1) member of the Board of Trustees, or by three (3) members of the Board of Trustees. Trustees shall be notified by the Secretary of such special meetings, and the subject of the meeting shall be contained 11 in such notice. Special meetings only allow for discussion and action of the item in question and does not allow for other business of the Association to be conducted. Special meetings shall be noticed within five (5) days following receipt of such a request. Section 8.5. Special Meetings of the Association: Special meetings of the association shall be called by the President and three (3) members of the Association, and can also be called upon written request of six or more members of the Association. Members shall be notified by the Secretary of such special meetings, and the subject of the meeting shall be contained in such notice. Special meetings only allow for discussion and action of the item in question and does not allow for other business of the Association to be conducted. Special meetings shall be noticed within five (5) following receipt of such a request. Section 8.6. Quorum: For the transaction of business at any annual, regular, and special meetings of the Association, a quorum shall be defined as, fifty-one percent (51%) of the Associations members. For the transaction of business at all Board of Trustees meeting, a quorum shall be defined as fifty-one percent (51%) of the trustees. A quorum must be present the entire meeting. Any time during any meeting a quorum is not present; the meeting shall recess and only reconvene upon a quorum being present. Section 8.7. Meeting notices and conduct: the annual, regular and special meetings of the Association shall confirm with applicable provisions of Minnesota’s Open Meeting Law and Minnesota’s Nonprofit Corporations Act. Subject to a waiver, notice shall be sent to every member at least five (5) days before the meeting. Such notice shall set forth the date, time, place, and in case of a special meeting, the purpose. The Secretary shall also post the time, date, location and purpose of the meeting on the bulletin board at the Fire Station or on the Association’s website at least five (5) days in advance of the meeting. Subject to waiver. Section 8.8. Reports: All reports and resolutions shall be submitted in writing, and no report shall be accepted unless it is the report of the majority of a committee, provided, however, that a minority shall be permitted to present its views in writing. Section 8.9. Parliamentary Procedure: All meetings shall be conducted in accordance with Robert's Rules of Order, as revised. Section 8.10. Order of Business: The order of business shall be: 1. Call to Order 2. Pledge of Allegiance 3. Roll Call 4. Reading of minutes of previous meeting 5. Reading of Reports and Minutes of the Board of Trustees’ Meeting 6. Reports of Officers 7. Applications for Membership 8. Reports of Special Committees 9. Unfinished Business 10. Election of Officers and Trustees (Annual Meeting or if there is a vacancy on the 12 board) 11. New Businesses 12. Good and Welfare of the Association 13. Adjournment Section 8.11. Location of Board Meeting: A meeting of the Board of Trustees shall be held at the registered office of the Association in the City of Hugo unless noticed for another place within the state as designated by the board. ARTICLE IX iNvEStMENtS Section 9.1. Prudent Person: Trustees shall discharge their duties in good faith and with that diligence and care which an ordinarily prudent person would exercise under similar circumstances. Trustees shall comply with all applicable laws including applicable provisions of the Minnesota Statues, Chapter 356A, The Public Pension Fiduciary Responsibility Act and Minnesota Statues, Chapter 424A, governing Minnesota’s Volunteer Firefighter Relief Associations. Section 9.2. Investment Duties: It shall be the duty of the Board of Trustees to prepare modes and plans for the safe and profitable investment of the unappropriated funds of the Associations general fund The Board of Trustees shall order an audit of the books and accounts of the Secretary and the Treasurer annually, according to law, and shall submit a written report of the condition of the Association to the members at the annual meeting of the Association. The members of the Board shall act as Trustees with a fiduciary obligation to the State of Minnesota, to the City of Hugo and the members of the Association. Section 9.3. Broker's Acknowledgement: The board of trustees shall comply with Minnesota Statutes §356A.06, Subd. 8b that requires the relief association to provide annually to any brokers, a written statement of investment restrictions pursuant to statute or the investment policy that applies to the special fund. Upon receipt of the written statement of investment restrictions, each broker handling investments of the Association shall acknowledge, in writing annually the receipt of the investment restrictions. The acknowledgment shall contain a statement that the broker agrees to handle the Association’s investments pursuant to the written restrictions, and in accordance with Minnesota law governing the investment of volunteer firefighter relief association assets. ARTICLE X fUNDS Section 10.1. Funds: All money received from the Association shall be kept in two separate funds. Disbursements from the funds shall be in accordance with Minnesota Statutes and Rules and the bylaws of the Relief Association. Section 10.2. General Fund: The funds received by this Association from, 13 entertainment revenues, fundraisers, property and gifts donated to the Association shall be kept in the general fund of the Association. The treasurer shall be the custodian of the assets of the general fund and maintain adequate records documenting any transaction involving the assets or the revenues of the general fund. The assets of the general fund may be disbursed for any purpose reasonably related to the welfare of the Association or its members, as authorized by the Board of Trustees. Any purchases from the general fund account, which has a fiscal note greater than five thousand dollars ($5,000) must be brought to the membership of the Association for approval. Section 10.3. Special Fund: All funds received by this Association qualifying as state aid received pursuant to law, all taxes levied by or other revenues received from the city pursuant to law providing for municipal support for the relief association, any moneys or property donated, given, granted or devised excluding fundraiser proceeds, by any person which is specified for the use for the support of the Special Fund, and any interest earned on the assets of the Special Fund. Any tax sources and other money which may be directly donated or transferred to said fund, shall be kept in a separate account on the books of the Treasurer known as the Special Fund and shall be disbursed only for the following purposes. 1. Payment of members' service pension benefits in accordance with these bylaws; 2. Payment of ancillary benefits in accordance with these bylaws; 3. Administrative expenses in accordance with the laws of Minn. Stat. §69.80424A.05 Subd. 3b, as amended, as follows: a) Office expense including but not limited to rent, utilities, equipment, supplies, postage, periodical subscriptions, furniture, fixtures and salaries of administrative personnel. b) Salaries and itemized expenses of the president, vice-president, secretary, and the treasurer of the association or their designees, incurred as a result of fulfilling their responsibilities as administrators of the special fund. c) Tuition, registrations fees, organizational dues, and other authorized expenses of the officers or members of the Board of Trustees incurred in attending educational conferences, seminars or classes relating to the administration of the relief association. d) Audit, actuarial, medical, legal and investment expenses. e) Reimbursement to the officers and members of the Board of Trustees, or their designees, for reasonable and necessary expenses actually paid and incurred in the performance of their duties as officers or members of the board; and f) Premiums on fiduciary liability insurance and official bonds for the officers, members of the Board of Trustees, and employees of the Relief Association. 14 All other expenses of the Association shall be paid out of the General Fund. Section 10.4. Authorization: No disbursement of the funds of this association shall be made except by checks drawn by the Treasurer and countersigned by either the President or SecretaryVice President. Except when issued for salaries, pensions and other fixed charges, the exact amount of which has previously been determined and authorized by the Board of Trustees (or the members in the case of disbursements from the general fund), no check shall be issued until the claim to which it relates has been approved by the Board of Trustees. Section 10.5. Depositories: All money belonging to the Association shall be deposited to the credit of the Association in such banks, trust companies, or other depositories as the Board of Trustees may designate. The board of trustees shall make deposits in conformance with state statute and the investment policy, attached hereto. ARTICLE Xi APPLicAtiON fOR BENEfitS Section 11.1. Application for Pension Benefits: All applications for relief or pension benefits shall be made in writing on forms furnished by the Secretary Section 11.2. Notice of intent to retire: It shall be the duty of each member who intends to retire and request a service pension from the association, to file a notice of intent to retire. Such notice shall be in writing and shall be filed by the Secretary not less than thirty days (30) prior to the date of retirement and submission of application for service pension. Upon receipt of a notice of intent to retire, the Secretary shall provide any notices to the applicant as required by state or federal law with respect to pension or benefit payments. Section 11.3. Submission: All applications for relief or pension benefits shall be submitted to the Board of Trustees at a regular or special meeting of the board or at a regular membership meeting. Applications shall be verified by an oath of the applicant and shall state the age of the applicant, the period or periods or service in, and the date of termination from active service with the Fire Department, and such other information as the Board of Trustees may require. Section 11.4. Board of Trustees Decisions: No relief or pension benefits shall be paid until the application has been approved by a majority vote of the Board of Trustees. Decisions of the board shall be final as to the payment of such benefits or pensions. Decisions of the board shall be subject to appeal in accordance with the Procedure for Review under these bylaws, as laid out in Article XVII. No other benefits shall be paid to or on behalf of any member who has received a service pension. Section 11.5. Appeal Rights: It shall be the duty of the Board of Trustees to approve applications for service pensions if the applicant meets all of the eligibility requirements set forth in these bylaws. It shall also be the duty of the Board of Trustees not to approve 15 the application if any of the eligibility requirements are not met. If an application is not approved, the Board of Trustees shall return the application to the applicant within 30 days, noting thereon, with particularity, which requirements the applicant does not meet. Thereafter, the applicant shall be furnished with the opportunity to be heard by the full Board of Trustees, pursuant to the Procedure for Review as provided by Article XVII of these bylaws. If the application is approved, the service pension shall be paid in the manner requested by the applicant pursuant to Article XIV, of these bylaws. ARTICLE XIi ANciLLARY BENEfitS Section 12.1. Survivor Benefits: Following the receipt of a lump sum survivor or funeral benefit neither a member’s surviving spouse nor estate is entitled to any other or further financial relief or benefits from the Association. (1) A member's Beneficiary shall be eligible to receive a benefit upon the death of an Active, Deferred or Retired Member who has not yet received his or her full retirement benefit. In no case shall the member receive less than one (1) times the benefit amount or the amount equal to his/her years of active service in the Hugo Fire Department, unless the member is vested. (2) If the member has no Surviving Spouse or surviving children, the member's benefit shall be distributed in a lump sum to the estate of the member ARTICLE XIII SERvicE PENSiONS Section 13.1. Lump Sum Pension: The exclusive pension benefit provide by the Association shall be a defined benefit lump sum service pension, paid based on the members years of active service. Upon meeting the requirements in Section 13.2 of this article, the member shall be entitled to the benefit amount for each year that the member has served as an active member of the fire department. In accordance with, Minnesota Statute 424A.10, the Association shall pay a supplement benefit to the qualified member in addition to the lump sum pension. The amount of this benefit shall equal ten (10) percent of the regular lump sum distribution, but in no case shall exceed one thousand dollars ($1,000.00). This supplemental benefit shall be reimbursed to the Association, in accordance with Minnesota Statute 424A.10 Section 13.2. Eligibility Requirements: To be eligible to receive a service pension a member must meet all of the following requirements. (1) Be at least fifty (50) years of age; (2) Have terminated from the Fire Department (3) Have completed at least ten (10) years of active service with the fire department before termination; and (4) Have been a member of the Association at least ten (10) years prior to such termination. 16 Section 13.3. Benefit Amount: The current benefit amount per year of service is $51005600. ARTICLE XIV tiMiNG AND MODES Of DiStRiBUtiON Section 14.1. Independent Expertise Encouraged: Because of the varying circumstances in each member's retirement planning, optional benefit payment methods are offered. Selection should occur after consultation with a tax consultant, insurance and/or estate planner, or an attorney. Alternate payment methods on the Application Form shall include: (1) Check. A single Lump sum check payment payable to the eligible retiree. (2) Annuity. Lump Sum payment by the Association to a recognized insurance carrier licensed to do business in this state and approved for this product by the Commerce Commissioner under Minn. Stat. § 60A.40. (3) Rollover. Rollover to an IRA account pursuant to Article XIV, Section 14.2 of these Bylaws. Section 14.2. Rollover to IRA. Upon written request from the retiring member who has given proper notice of retirement, the Secretary or Treasurer shall directly transfer the service pension amount into an Individual Retirement Account under Section 408(a) of the Internal Revenue Code, as amended. ARTICLE XV EARLY vEStiNG PROviSiON Section 15.1. Vesting Schedule: In the event a member with ten (10) years or more but less than twenty (20) years of active service on the Fire Department resigns or otherwise becomes a nonmember, that person shall be entitled to the following benefit that represents the no forfeitable portion of. Completed Years of Active Service Non-forfeitable Percentage of Pension Amount 10 60 percent 11 64 percent 12 68 percent 17 13 72 percent 14 76 percent 15 80 percent 16 84 percent 17 88 percent 18 92 percent 19 96 percent 20 and thereafter 100 percent ARTICLE XVI DEfERRED PENSiON StAtUS Section 16.1. Deferred pension rolls: A member of the Association who has served as an active firefighter in the Fire Department for at least ten (10) years, but has not reached the age of fifty (50) years, may terminate from the Fire Department and be placed on the deferred pension roll. Upon reaching age fifty (50) and provided that membership in the Association has been maintained for at least ten (10) years, upon approval of a valid written application, in accordance with Section 13.2, and Section 13.3 of these Bylaws such member shall be paid the base sum for each year of active service in the Fire Department as was payable at the time of termination from active service in the Fire Department and reduced pursuant to the early vesting schedule in Article XV of the Bylaws. A member who is on the deferred pension roll shall not be eligible to receive any of the ancillary benefits provided for in these By-laws except those that are specified. Section 16.2. Interest paid: The Association shall, add to the deferred member's account, interest, at the rate of five percent (5%) compounded annually. The deferred interest credit method will be based on full calendar months. Section 16.3. Deceased Deferred Member: If the member dies while on the deferred pension roll, the total deferred pension applicable at the time of death shall be paid to the members surviving spouse or children, or estate pursuant to Article XII of the Bylaws. ARTICLE XVII PROcEDURE fOR REviEW Section 17.1. Right to Appeal: In the event that the Board of Trustees denies an application for a service or ancillary pension benefit, the member shall be entitled to the right to appeal the determination. 18 Section 17.2. Asserting Appeal Rights: If an application is not approved. The Board of Trustees shall return the application to the applicant within thirty (30) days. noting thereon, with particularity, to which requirements the applicant has not met. Thereafter, the applicant shall be furnished with the opportunity to be heard by the full Board of Trustees, on the question of whether the applicant meets all of the eligibility requirements. The member shall indicate that the member intends to appeal by furnishing the Board of Trustees with a written intent to appeal that is filed with the Secretary of the association within thirty (30) days of receiving an adverse determination. The intent to appeal shall be certified by the member. Section 17.3. Procedure: Upon receipt of the written intent to appeal, the Board of Trustees shall hold a special meeting within sixty (60) days of receipt of the written intent to appeal. Timely notice of the meeting shall be given to the member at least fifteen (15) days prior to the special meeting. The member shall have the reasonable opportunity to be heard by the Board of Trustees at the special meeting with regard to the negative determination. The board reserves the right to engage the services of a mediator or arbitrator, acceptable to both parties, at any time during the appeal. The mediator or arbitrator shall be selected from the Rule 114 Supreme Court Roster. The cost of the mediator or arbitrator shall be split in half among both parties. ARTICLE XVIII LiMitS ON BENEfitS Section 18.1. Domestic Relations Order: A domestic relations order shall be accepted by the plan administrator if in compliance with state and federal law. No benefits shall be paid under a domestic relations order which requires the plan to provide any type or form of benefit, or any option, not otherwise provided under the Plan or under state law. Section 18.2. Garnishment, judgment or legal process: No service pension or ancillary benefits paid or payable from the special fund of a relief association to any person receiving or entitled to receive a service pension or ancillary benefits shall be subject to garnishment, judgment, execution, or other legal process, except as provided in Minn. Stat. §§518.58 ,or 518.581., or 518.611. Section 18.3. Assignments: No person entitled to a service pension or ancillary benefits from the special fund of a relief association may assign any service pension or ancillary benefit payments, nor shall the association have the authority to recognize any assignment or pay over any sum which has been assigned. Section 18.4. Limits on Pensions: No provision, which places limits on benefits, as contained within Section 415 of the Internal Revenue Code shall be exceeded. Plan participants cannot receive an annual benefit greater than the amount specified in Section 415 of the code as may subsequently be amended. ARTICLE XIX 19 AMENDMENtS Section 19.1 Amendment (s) Procedures: The bylaws of the Association may be amended at any regular or special meeting of the Association by a majority of the members present and voting, provided that a quorum is present. At the meeting, the membership shall have an opportunity to discuss the proposed amendments (s). After the discussion the proposed amendments (s) may be acted upon. Subject to a waiver, the Secretary of the Association shall mail notice to each member, at their last known address, not less than thirty (30) days prior to the reading and vote of the proposed amendment (s). Such notice shall set forth the date, time, place, proposed amendment (s) and any other purpose of the meeting. The Secretary shall also post the same notice on the bulletin board at the Fire Department. If such amendment or amendments shall change the amount of benefits or pensions, approval of the Hugo City Council must be obtained if a municipal contribution is required to fund such change or if state law so requires. ARTICLE XX REviEW Section 20.1. Periodical review: These bylaws shall be reviewed by a committee of no less than three (3) people on a biannual basis. The review committee shall be composed of the President of the Association and members of the General membership. This review shall occur on an as needed basis. Agenda Number: G.13 CITY OF HUGO PLANNING AND ZONING APPLICATION STAFF REPORT TO: Bryan Bear, City Administrator FROM: Max Gort, Associate Planner SUBJECT: Anthony and Andrea Liebhard – Encroachment agreement to allow a shed within a drainage and utility easement on property located at 4801 142nd Street North. DATE: July 3, 2025 for the City Council meeting of July 7, 2025 ZONING: Planned Unit Development (PUD) LAND USE: Low Density Residential (LD) 60-DAY REVIEW DEADLINE: August 5, 2025 1. DESCRIPTION OF REQUEST: The applicants are requesting an encroachment agreement to allow construction of a shed within a drainage and utility easement on property located at 4801 142nd Street North. The Senior Engineering Technician has reviewed the location of the shed and is comfortable with the request. 2. CONCLUSION/RECOMMENDATION: Staff has reviewed the request and recommends that the City Council approve the encroachment agreement for the property located at 4801 142nd Street North. ATTACHMENTS: 1. Location Map 2. Encroachment Agreement Resolution 3. Encroachment Agreement 4. Site Plan Do c u m e n t P a t h : S : \ M a p p i n g \ S i t e M a p s \ 2 0 2 5 S i t e M a p s \ 8 , 5 x 1 1 _ p o r t r a i t b o r d e r D a t e S a v e d : 5 / 3 0 / 2 0 2 5 0 6030 Feet¯4801 142nd St N Location Map Hugo, Minnesota Parcel Boundary selection Parcel Boundary Roads 1 in = 50 feet Site RESOLUTION 2025-__ APPROVING AN ENCROACHMENT AGREEMENT TO ALLOW CONSTRUCTION OF A SHED WITHIN A DRAINAGE AND UTILITY EASEMENT ON THE PROPERTY LOCATED AT 4801 142ND STREET NORTH WHEREAS, an application has been filed by Anthony and Andrea Liebhard that requests approval of an encroachment agreement to allow construction of a shed within a drainage and utility easement on the property located at 4801 142nd Street North, legally described as follows; Lot 1, Block 3, Clearwater Cove, Washington County, Minnesota. WHEREAS, the City Council has fully considered the request for the encroachment agreement. NOW, THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF THE CITY OF HUGO, MINNESOTA, that it should and hereby does approve the encroachment agreement on property located at 4801 142nd Street North. ADOPTED by the City Council this 7th day of July, 2025. ________________________________________ Tom Weidt, Mayor ATTEST: _________________________________ Michele Lindau, City Clerk ENCROACHMENT AGREEMENT THIS AGREEMENT is made this 7th day of July, 2025 by and between the CITY OF HUGO, a Minnesota municipality (hereinafter “City”) and Anthony Liebhard and Andrea Liebhard, a married couple, (hereinafter “Owner”), and their successors in title. WHEREAS, the City has an easement for drainage and utility purposes (the “Easement”) along the northerly, westerly, easterly, and southerly portion of the Owner’s property, which is legally described as: Lot 1, Block 3, Clearwater Cove, Washington County, Minnesota; and, WHEREAS, Owner is desirous of constructing a shed partially within the easement area; and, WHERAS, the City will permit the placement of a shed in the area described herein subject to the terms and conditions hereof. NOW, THEREFORE, in consideration of the premises and for good and valuable consideration, the receipt of which is acknowledged, the City will permit the encroachment on its easement as set forth herein and subject to the conditions set forth below: 1. Owner and their successors in title may install and maintain a shed within the Easement, and the shed shall be constructed in accordance with the plans on file with the City of Hugo. 2. No plantings, trees, permanent improvements or structures other than the shed may be maintained or placed in the easement area. 3. Owner shall maintain the shed in good repair and shall not permit it to be expanded, lengthened or to impair the City’s easement or its rights thereunder in any respect. 4. The encroachment granted to Owner herein is subject to the existing easement rights of the City as granted in various easements. 5. The City will notify Owner if it requires removal or relocation of the shed or any part of it. Thereafter, Owner shall remove the shed according to the direction of the City and if Owner fails to do so, the City may enter upon the land and remove as much of the shed as required and cast it upon the adjoining lands. In such an event, the City shall not be liable to Owner for any costs, loss or damage whatsoever, and may assess the property for all of its costs incurred in removing the shed, and Owner waive all formalities, requirements and defenses arising from or relating to Minnesota Statutes Section 429 relating to or arising from the work done by the City. 6. To the fullest extent permitted by law, Owner agrees to release, defend, protect, indemnify, save and hold harmless the City, its agents, directors, employees, shareholders and contractors against any and all claims, costs and liabilities, including the costs of defense for damages, injury or death arising from or in any way connected to the installation, maintenance, repair, removal and/or presence of the shed, regardless of whether such harm is to Owner, the City, the employees or officers, guests or invitees of either or any other person or entity, except Owner shall not be liable under this paragraph for loss or damage to the extent resulting from the negligen ce of the indemnified parties. 7. The permission granted herein is limited exclusively to the proposed shed within the specified portion of the easement area of the City’s Easement. Owner shall not alter the grade or permit such alteration anywhere upon the land upon which the City has reserved its easement rights without proper express written consent of the City. 8. Owner shall, at all times, use their best efforts to conduct all of their activities on said Easement in such a manner as to not interfere with or impede the operation of the City’s Easement and related activities in any manner whatsoever, and shall follow the direction of the City. 9. This Agreement shall run with the land and inure to the benefit and be binding upon the parties hereto, their heirs, successors and assigns. 10. Owner shall be responsible for the costs of recording this Agreement with the Washington County Recorder. 11. The shed shall be constructed with chain link so as not to impede drainage through the swale along the southern portion of the property. WHEREUPON, the parties have set their hands this day of , 2025. CITY OF HUGO By By Tom Weidt, Mayor Michele Lindau, City Clerk STATE OF MINNESOTA ) ) ss. COUNTY OF WASHINGTON) On this _____ day of __________________, 2025, before me, a Notary Public, personally appeared TOM WEIDT and MICHELE LINDAU, of the City of Hugo, a Minnesota municipality within the State of Minnesota, and that said instrument was signed on behalf of the City of Hugo by the authority of the City Council of the City of Hugo, and TOM WEIDT and MICHELE LINDAU acknowledge said instrument to be the free act and deed of said City of Hugo. __________________________________________ Notary Public _____________________________________ Anthony Liebhard, Owner _____________________________________ Andrea Liebhard, Owner STATE OF MINNESOTA ) ) ss. (Individual Notary) COUNTY OF WASHINGTON) On this _____ day of __________________, 2025, before me, a Notary Public, personally appeared Anthony Liebhard and Andrea Liebhard, a married couple, who signed the foregoing instrument and acknowledged said instrument to be their free act and deed. __________________________________________ Notary Public THIS INSTRUMENT DRAFTED BY: David K. Snyder Johnson & Turner, P.A. 56 East Broadway Avenue, Suite 206 Forest Lake, MN 55025 (651) 464-7292 Agenda Number: G.14 CITY OF HUGO PLANNING AND ZONING APPLICATION STAFF REPORT TO: Bryan Bear, City Administrator FROM: Max Gort, Associate Planner SUBJECT: Caitlin and Nicholas Frucci – Encroachment agreement to allow a fence within a drainage and utility easement on property located at 15539 Goodview Trail North. DATE: July 3, 2025 for the City Council meeting of July 7, 2025 ZONING: Planned Unit Development (PUD) LAND USE: Low Density Residential (LD) 60-DAY REVIEW DEADLINE: August 17, 2025 1. DESCRIPTION OF REQUEST: The applicants are requesting an encroachment agreement to allow construction of a fence within a drainage and utility easement on property located at 15539 Goodview Trail North. The Senior Engineering Technician has reviewed the location of the fence and is comfortable with the request, provided that the fence is aligned in such a way that the manhole in the southwest corner of the property is still accessible for maintenance purposes. 2. CONCLUSION/RECOMMENDATION: Staff has reviewed the request and recommends that the City Council approve the encroachment agreement for the property located at 15539 Goodview Trail North. ATTACHMENTS: 1. Location Map 2. Encroachment Agreement Resolution 3. Encroachment Agreement 4. Site Plan Do c u m e n t P a t h : S : \ M a p p i n g \ S i t e M a p s \ 2 0 2 5 S i t e M a p s \ 8 , 5 x 1 1 _ p o r t r a i t b o r d e r D a t e S a v e d : 5 / 3 0 / 2 0 2 5 0 6030 Feet¯15539 Goodview Trl N Location Map Hugo, Minnesota Parcel Boundary selection Parcel Boundary Roads 1 in = 50 feet Site RESOLUTION 2025-__ APPROVING AN ENCROACHMENT AGREEMENT TO ALLOW CONSTRUCTION OF A FENCE WITHIN A DRAINAGE AND UTILITY EASEMENT ON THE PROPERTY LOCATED AT 15539 GOODVIEW TRAIL NORTH WHEREAS, an application has been filed by Caitlin and Nicholas Frucci that requests approval of an encroachment agreement to allow construction of a fence within a drainage and utility easement on the property located at 15539 Goodview Trail North, legally described as follows; Lot 4, Block 1, The Shores of Oneka Lake, Washington County, Minnesota. WHEREAS, the City Council has fully considered the request for the encroachment agreement. NOW, THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF THE CITY OF HUGO, MINNESOTA, that it should and hereby does approve the encroachment agreement on property located at 15539 Goodview Trail North. ADOPTED by the City Council this 7th day of July, 2025. ________________________________________ Tom Weidt, Mayor ATTEST: _________________________________ Michele Lindau, City Clerk ENCROACHMENT AGREEMENT THIS AGREEMENT is made this 7th day of July, 2025 by and between the CITY OF HUGO, a Minnesota municipality (hereinafter “City”) and, Caitlin Frucci and Nicholas Frucci, a married couple, (hereinafter “Owner”), and their successors in title. WHEREAS, the City has an easement for drainage and utility purposes (the “Easement”) along the northerly, westerly, easterly, and southerly portion of the Owner’s property, which is legally described as: Lot 4, Block 1, The Shores of Oneka Lake, Washington County, Minnesota; and, WHEREAS, Owner is desirous of constructing a fence partially within the easement area; and, WHERAS, the City will permit the placement of a fence in the area described herein subject to the terms and conditions hereof. NOW, THEREFORE, in consideration of the premises and for good and valuable consideration, the receipt of which is acknowledged, the City will permit the encroachment on its easement as set forth herein and subject to the conditions set forth below: 1. Owner and their successors in title may install and maintain a fence within the Easement, and the fence shall be constructed in accordance with the plans on file with the City of Hugo. 2. No plantings, trees, permanent improvements or structures other than the fence may be maintained or placed in the easement area. 3. Owner shall maintain the fence in good repair and shall not permit it to be expanded, lengthened or to impair the City’s easement or its rights thereunder in any respect. 4. The encroachment granted to Owner herein is subject to the existing easement rights of the City as granted in various easements. 5. The City will notify Owner if it requires removal or relocation of the fence or any part of it. Thereafter, Owner shall remove the fence according to the direction of the City and if Owner fails to do so, the City may enter upon the land and remove as much of the fence as required and cast it upon the adjoining lands. In such an event, the City shall not be liable to Owner for any costs, loss or damage whatsoever, and may assess the property for all of its costs incurred in removing the fence, and Owner waive all formalities, requirements and defenses arising from or relating to Minnesota Statutes Section 429 relating to or arising from the work done by the City. 6. To the fullest extent permitted by law, Owner agrees to release, defend, protect, indemnify, save and hold harmless the City, its agents, directors, employees, shareholders and contractors against any and all claims, costs and liabilities, including the costs of defense for damages, injury or death arising from or in any way connected to the installation, maintenance, repair, removal and/or presence of the fence, regardless of whether such harm is to Owner, the City, the employees or officers, guests or invitees of either or any other person or entity, except Owner shall not be liable under this paragraph for loss or damage to the extent resulting from the negligen ce of the indemnified parties. 7. The permission granted herein is limited exclusively to the proposed fence within the specified portion of the easement area of the City’s Easement. Owner shall not alter the grade or permit such alteration anywhere upon the land upon which the City has reserved its easement rights without proper express written consent of the City. 8. Owner shall, at all times, use their best efforts to conduct all of their activities on said Easement in such a manner as to not interfere with or impede the operation of the City’s Easement and related activities in any manner whatsoever, and shall follow the direction of the City. 9. This Agreement shall run with the land and inure to the benefit and be binding upon the parties hereto, their heirs, successors and assigns. 10. Owner shall be responsible for the costs of recording this Agreement with the Washington County Recorder. 11. The fence shall be constructed with chain link so as not to impede drainage through the swale along the southern portion of the property. WHEREUPON, the parties have set their hands this day of , 2025. CITY OF HUGO By By Tom Weidt, Mayor Michele Lindau, City Clerk STATE OF MINNESOTA ) ) ss. COUNTY OF WASHINGTON) On this _____ day of __________________, 2025, before me, a Notary Public, personally appeared TOM WEIDT and MICHELE LINDAU, of the City of Hugo, a Minnesota municipality within the State of Minnesota, and that said instrument was signed on behalf of the City of Hugo by the authority of the City Council of the City of Hugo, and TOM WEIDT and MICHELE LINDAU acknowledge said instrument to be the free act and deed of said City of Hugo. __________________________________________ Notary Public _____________________________________ Caitlin Frucci, Owner _____________________________________ Nicholas Frucci, Owner STATE OF MINNESOTA ) ) ss. (Individual Notary) COUNTY OF WASHINGTON) On this _____ day of __________________, 2025, before me, a Notary Public, personally appeared Caitlin Frucci and Nicholas Frucci, a married couple, who signed the foregoing instrument and acknowledged said instrument to be their free act and deed. __________________________________________ Notary Public THIS INSTRUMENT DRAFTED BY: David K. Snyder Johnson & Turner, P.A. 56 East Broadway Avenue, Suite 206 Forest Lake, MN 55025 (651) 464-7292 Agenda Number: G.15 CITY OF HUGO PLANNING AND ZONING APPLICATION STAFF REPORT TO: Bryan Bear, City Administrator FROM: Max Gort, Associate Planner SUBJECT: Anthony and Judith Straquadine– Encroachment agreement to allow a fence within a drainage and utility easement on property located at 6209 157th Street North. DATE: July 3, 2025 for the City Council meeting of July 7, 2025 ZONING: Planned Unit Development (PUD) LAND USE: Low Density Residential (LD) 60-DAY REVIEW DEADLINE: August 30, 2025 1. DESCRIPTION OF REQUEST: The applicants are requesting an encroachment agreement to allow construction of a fence within a drainage and utility easement on property located at 6209 157th Street North. The Senior Engineering Technician has reviewed the location of the fence and is comfortable with the request. 2. CONCLUSION/RECOMMENDATION: Staff has reviewed the request and recommends that the City Council approve the encroachment agreement for the property located at 6209 157th Street North. ATTACHMENTS: 1. Location Map 2. Encroachment Agreement Resolution 3. Encroachment Agreement 4. Site Plan Do c u m e n t P a t h : S : \ M a p p i n g \ S i t e M a p s \ 2 0 2 5 S i t e M a p s \ 8 , 5 x 1 1 _ p o r t r a i t b o r d e r D a t e S a v e d : 5 / 3 0 / 2 0 2 5 0 6030 Feet¯6209 157th Street N Location Map Hugo, Minnesota Parcel Boundary selection Parcel Boundary Roads 1 in = 50 feet Site RESOLUTION 2025-__ APPROVING AN ENCROACHMENT AGREEMENT TO ALLOW CONSTRUCTION OF A FENCE WITHIN A DRAINAGE AND UTILITY EASEMENT ON THE PROPERTY LOCATED AT 6209 157th STREET NORTH WHEREAS, an application has been filed by Anthony and Judith Straquadine that requests approval of an encroachment agreement to allow construction of a fence within a drainage and utility easement on the property located at 6209 157th Street North, legally described as follows; Lot 3, Block 7, The Shores of Oneka Lake, Washington County, Minnesota. WHEREAS, the City Council has fully considered the request for the encroachment agreement. NOW, THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF THE CITY OF HUGO, MINNESOTA, that it should and hereby does approve the encroachment agreement on property located at 6209 157th Street North. ADOPTED by the City Council this 7th day of July, 2025. ________________________________________ Tom Weidt, Mayor ATTEST: _________________________________ Michele Lindau, City Clerk ENCROACHMENT AGREEMENT THIS AGREEMENT is made this 7th day of July, 2025 by and between the CITY OF HUGO, a Minnesota municipality (hereinafter “City”) and The Straquadine Living Trust, (hereinafter “Owner”), and their successors in title. WHEREAS, the City has an easement for drainage and utility purposes (the “Easement”) along the northerly, westerly, easterly, and southerly portion of the Owner’s property, which is legally described as: Lot 3, Block 7, The Shores of Oneka Lake, Washington County, Minnesota; and, WHEREAS, Owner is desirous of constructing a fence partially within the easement area; and, WHERAS, the City will permit the placement of a fence in the area described herein subject to the terms and conditions hereof. NOW, THEREFORE, in consideration of the premises and for good and valuable consideration, the receipt of which is acknowledged, the City will permit the encroachment on its easement as set forth herein and subject to the conditions set forth below: 1. Owner and their successors in title may install and maintain a fence within the Easement, and the fence shall be constructed in accordance with the plans on file with the City of Hugo. 2. No plantings, trees, permanent improvements or structures other than the fence may be maintained or placed in the easement area. 3. Owner shall maintain the fence in good repair and shall not permit it to be expanded, lengthened or to impair the City’s easement or its rights thereunder in any respect. 4. The encroachment granted to Owner herein is subject to the existing easement rights of the City as granted in various easements. 5. The City will notify Owner if it requires removal or relocation of the fence or any part of it. Thereafter, Owner shall remove the fence according to the direction of the City and if Owner fails to do so, the City may enter upon the land and remove as much of the fence as required and cast it upon the adjoining lands. In such an event, the City shall not be liable to Owner for any costs, loss or damage whatsoever, and may assess the property for all of its costs incurred in removing the fence, and Owner waive all formalities, requirements and defenses arising from or relating to Minnesota Statutes Section 429 relating to or arising from the work done by the City. 6. To the fullest extent permitted by law, Owner agrees to release, defend, protect, indemnify, save and hold harmless the City, its agents, directors, employees, shareholders and contractors against any and all claims, costs and liabilities, including the costs of defense for damages, injury or death arising from or in any way connected to the installation, maintenance, repair, removal and/or presence of the fence, regardless of whether such harm is to Owner, the City, the employees or officers, guests or invitees of either or any other person or entity, except Owner shall not be liable under this paragraph for loss or damage to the extent resulting from the negligen ce of the indemnified parties. 7. The permission granted herein is limited exclusively to the proposed fence within the specified portion of the easement area of the City’s Easement. Owner shall not alter the grade or permit such alteration anywhere upon the land upon which the City has reserved its easement rights without proper express written consent of the City. 8. Owner shall, at all times, use their best efforts to conduct all of their activities on said Easement in such a manner as to not interfere with or impede the operation of the City’s Easement and related activities in any manner whatsoever, and shall follow the direction of the City. 9. This Agreement shall run with the land and inure to the benefit and be binding upon the parties hereto, their heirs, successors and assigns. 10. Owner shall be responsible for the costs of recording this Agreement with the Washington County Recorder. 11. The fence shall be constructed with chain link so as not to impede drainage through the swale along the southern portion of the property. WHEREUPON, the parties have set their hands this day of , 2025. CITY OF HUGO By By Tom Weidt, Mayor Michele Lindau, City Clerk STATE OF MINNESOTA ) ) ss. COUNTY OF WASHINGTON) On this _____ day of __________________, 2025, before me, a Notary Public, personally appeared TOM WEIDT and MICHELE LINDAU, of the City of Hugo, a Minnesota municipality within the State of Minnesota, and that said instrument was signed on behalf of the City of Hugo by the authority of the City Council of the City of Hugo, and TOM WEIDT and MICHELE LINDAU acknowledge said instrument to be the free act and deed of said City of Hugo. __________________________________________ Notary Public _____________________________________ Anthony Straquadine, Jr., Trustee STATE OF MINNESOTA ) ) ss. (Individual Notary) COUNTY OF WASHINGTON) On this _____ day of __________________, 2025, before me, a Notary Public, personally appeared Anthony Straquadine, Jr., Trustee of The Straquadine Living Trust, who signed the foregoing instrument and acknowledged said instrument to be their free act and deed. __________________________________________ Notary Public THIS INSTRUMENT DRAFTED BY: David K. Snyder Johnson & Turner, P.A. 56 East Broadway Avenue, Suite 206 Forest Lake, MN 55025 (651) 464-7292 2025 City of Hugo Gravel Road Resurfacing Project 140th Street Fiona Road 147th Street 172994853v4 RESOLUTION NO. _______ RESOLUTION APPROVING THE ISSUANCE AND SALE OF AN EDUCATIONAL FACILITIES REVENUE NOTE, SERIES 2025 AND AUTHORIZING THE EXECUTION OF DOCUMENTS RELATING THERETO (LEGACY CHRISTIAN ACADEMY PROJECT) WHEREAS, (a) Minnesota Statutes, Sections 469.152 to 469.165, as amended (the "Act"), authorizes cities to issue revenue bonds to finance or refinance industrial development projects to promote the welfare of the state by the active development of economically sound industry and commerce to meet the needs of an increasing population and the need for development of land use which will provide an adequate tax base to finance the increasing cost of governmental services and access to employment opportunities for such population; (b) Factors necessitating the active promotion and development of economically sound industry and commerce are the increasing concentration of population in the metropolitan areas and the rapidly rising increase in the amount and cost of governmental services required to meet the needs of the increased population and the need for development of land use which will provide an adequate tax base to finance these increased costs and the need for access to employment opportunities for such population; (c) The City Council of the City of Hugo, Minnesota (the "City") has received from Legacy Christian Academy, a Minnesota nonprofit corporation organized under the laws of the State of Minnesota (the "Borrower"), a proposal that the City undertake a program to finance the Project (as defined below) through the issuance of revenue bonds or other obligations, in one or more series pursuant to the Act, and in connection therewith the following described note is to be issued: City of Hugo, Educational Facilities Revenue Note, Series 2025 (Legacy Christian Academy Project) (the "Note"), in the aggregate principal amount not to exceed $6,000,000; (d) The City desires to facilitate the selective development of the surrounding community, retain and improve the tax base and help to provide the range of services and employment opportunities required by the population, including educational services; and the Project will assist the City in achieving those objectives and will enhance the image and reputation of the City and the surrounding community; (e) The “Project” to be financed by the Note consists of financing, in part, the acquisition of land and the improvements thereon for the purpose of the expansion and continued operation of a private pre-k–12 school facility located at 3037 Bunker Lake Blvd NW in Andover, Minnesota, including classrooms, administrative offices, and other spaces; (f) The City has been advised by representatives of the Borrower that, with the aid of municipal financing, and its resulting lower borrowing cost, the Project is economically more feasible; 172994853v4 2 (g) Based on representations of the Borrower, no public official of the City has either a direct or indirect financial interest in the Project nor will any public official either directly or indirectly benefit financially from the Project; and (h) The Note, as and when issued, will not constitute a charge, lien or encumbrance upon any property of the City, or the City of Andover and will not be a charge against the general credit or taxing powers of the City or the City of Andover; (i) A public hearing on the Project was held on July 7, 2025, after notice was published and materials made available for public inspection at the City Hall, all as required by the Act and Section 147(f) of the Internal Revenue Code of 1986, as amended, at which public hearing all those appearing who desired to speak were heard and written comments were accepted. BE IT RESOLVED by the City Council of the City, as follows: SECTION 1. LEGAL AUTHORIZATION AND FINDINGS. 1.1 Findings. The City hereby finds, determines and declares as follows: (a) The City is a municipal corporation and a political subdivision of the State of Minnesota and is authorized under the Act to assist the revenue producing project herein referred to, and to issue and sell the Note, for the purpose, in the manner and upon the terms and conditions set forth in the Act and in this Resolution. (b) The issuance and sale of the Note by the City, pursuant to the Act, is in the best interest of the City, and the City hereby determines to issue the Note and to sell the Note to Falcon National Bank, a national banking association with one of its locations in Isanti, Minnesota or another banking institution with one or more locations in Minnesota (the "Lender"). The City will loan the proceeds of the Note to the Borrower in order to finance the Project. (c) Pursuant to a Loan Agreement (the "Loan Agreement") to be entered into between the City and the Borrower, the Borrower has agreed to repay the Note in specified amounts and at specified times sufficient to pay in full when due the principal of, premium, if any, and interest on the Note. In addition, the Loan Agreement contains provisions relating to the maintenance and operation of the Project, indemnification, insurance, and other agreements and covenants which are required or permitted by the Act and which the City and the Borrower deem necessary or desirable for the financing of the Project. A draft of the Loan Agreement has been submitted to the City Council. (d) Pursuant to a Pledge Agreement (the "Pledge Agreement") to be entered into between the City and the Lender, the City has pledged and granted a security interest in all of its rights, title, and interest in the Loan Agreement to the Lender (except for certain rights of indemnification and to reimbursement for certain costs and expenses). A draft of the Pledge Agreement has been submitted to the City Council. (e) Pursuant to a Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Financing Statement (the "Mortgage") to be executed by the 172994853v4 3 Borrower and the Lender, the Borrower has secured payment of amounts due under the Loan Agreement and Note by granting to the Lender a mortgage and security interest in the property described therein. A draft of the Mortgage has been submitted to the City Council. The City is not a party to the Mortgage. (f) The Note will be a special, limited obligation of the City. The Note shall not be payable from or charged upon any funds other than the revenues pledged to the payment thereof, nor shall the City be subject to any liability thereon. No holder of the Note shall ever have the right to compel any exercise of the taxing power of the City to pay the Note or the interest thereon, nor to enforce payment thereof against any property of the City. The Note shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation. (g) Nothing in this resolution or the documents prepared pursuant hereto shall authorize the expenditure of any municipal funds on the Project other than the revenues derived from the Project or otherwise granted to the City for this purpose. The Note shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property or funds of the City except the revenue and proceeds pledged to the payment thereof, nor shall the City be subject to any liability thereon. The holder of the Note shall never have the right to compel any exercise of the taxing power of the City to pay the outstanding principal on the Note or the interest thereon, or to enforce payment thereon against any property of the City, except such property as may be expressly pledged for the security of the Note. The Note shall recite in substance that the Note, including the interest thereon, is payable solely from the revenue derived from the Project and pledged to the payment thereof. (h) On the basis of information available to the City it appears, and the City hereby finds, that the Project constitutes properties, real and personal, used or useful in connection with educational facilities within the meaning of the Act; that the Project furthers the purposes stated in the Act; that the availability of the financing under the Act and the willingness of the City to furnish such financing will be a substantial inducement to the Borrower to undertake the Project, and that the effect of the Project, if undertaken, will be to assist in the prevention of the emergence of blighted and marginal land, to help prevent chronic unemployment, to help the surrounding area retain and eventually improve the tax base, to provide the range of service and employment opportunities required by the population, to help prevent the movement of talented and educated persons out of the state and to areas within the State where their services may not be as effectively used, and to promote more intensive development and use of land within the City and surrounding communities, and to provide available adequate educational facilities to residents of the State at a reasonable cost. (i) It is desirable, feasible, and consistent with the objects and purposes of the Act to issue the Note for the purpose of financing a portion of the costs of the Project. SECTION 2. THE NOTE. 2.1 Authorized Amount and Form of Note. The Note is hereby approved and shall be issued pursuant to this Resolution in substantially the form submitted to the City Council with such 172994853v4 4 appropriate variations, omissions and insertions as are necessary and appropriate and are permitted or required by this Resolution, and in accordance with the further provisions hereof; and the aggregate principal amount of the Note that may be outstanding hereunder is expressly limited to $6,000,000, unless a duplicate Note is issued pursuant to Section 2.7. The Note shall bear interest at a variable rate as set forth therein. 2.2 The Note. The Note shall be dated as of the date of delivery to the Lender, shall be payable at the times and in the manner, shall bear interest at the rate, and shall be subject to such other terms and conditions as are set forth therein. 2.3 Execution. The Note shall be executed on behalf of the City by the signatures of its Mayor and the City Administrator and shall be sealed with the seal of the City; provided that the seal may be intentionally omitted as provided by law. In case any officer whose signature shall appear on the Note shall cease to be such officer before the delivery of the Note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. In the event of the absence or disability of the Mayor or the City Administrator such officers of the City as, in the opinion of the City Attorney, may act in their behalf, shall without further act or authorization of the City Council execute and deliver the Note. 2.4 Delivery of Initial Note. Before delivery of the Note there shall be filed with the Lender (except to the extent waived by the Lender) the following items: (1) an executed copy of each of the following documents: (a) the Loan Agreement; (b) the Pledge Agreement; and (c) the Mortgage; (2) an opinion of counsel for the Borrower as prescribed by the Lender and Taft Stettinius & Hollister LLP, as Bond Counsel; (3) the opinion of Bond Counsel as to the validity and tax exempt status of the Note; (4) a 501(c)(3) determination letter from the Internal Revenue Service evidencing that the Borrower is exempt from income taxation under Section 501(c)(3) of the Code; (5) such other documents and opinions as Bond Counsel may reasonably require for purposes of rendering its opinion required in subsection (3) above or that the Lender may reasonably require for the closing. 2.5 Disposition of Proceeds of the Note. Upon delivery of the Note to Lender, the Lender shall, on behalf of the City, disburse the proceeds of the Note for payment of costs of the Project in accordance with the terms of the Loan Agreement. 172994853v4 5 2.6 Registration of Transfer. The City will cause to be kept at the office of the City Administrator a Note Register in which, subject to such reasonable regulations as it may prescribe, the City shall provide for the registration of transfers of ownership of the Note. The Note shall be initially registered in the name of the Lender and shall be transferable upon the Note Register by the Lender in person or by its agent duly authorized in writing, upon surrender of the Note together with a written instrument of transfer satisfactory to the City Administrator, duly executed by the Lender or its duly authorized agent. The following form of assignment shall be sufficient for said purpose. For value received ___________ hereby sells, assigns and transfers unto ________________ the within Note of the City of Hugo, Minnesota, and does hereby irrevocably constitute and appoint ___________________ attorney to transfer said Note on the books of said City with full power of substitution in the premises. The undersigned certifies that the transfer is made in accordance with the provisions of Section 2.9 of the Resolution authorizing the issuance of the Note. Dated: Registered Owner Upon such transfer the City Administrator shall note the date of registration and the name and address of the new Lender in the applicable Note Register and in the registration blank appearing on the Note. 2.7 Mutilated, Lost or Destroyed Note. In case the Note issued hereunder shall become mutilated or be destroyed or lost, the City shall, if not then prohibited by law, cause to be executed and delivered, a new Note of like outstanding principal amount, number and tenor in exchange and substitution for and upon cancellation of such mutilated Note, or in lieu of and in substitution for such Note destroyed or lost, upon the Lender's paying the reasonable expenses and charges of the City in connection therewith, and in the case of a Note destroyed or lost, the filing with the City of evidence satisfactory to the City with indemnity satisfactory to it. If the mutilated, destroyed or lost Note has already matured or been called for redemption in accordance with its terms it shall not be necessary to issue a new Note prior to payment. 2.8 Ownership of Note. The City may deem and treat the person in whose name the Note is last registered in the Note Register and by notation on the Note whether or not such Note shall be overdue, as the absolute owner of such Note for the purpose of receiving payment of or on account of the Principal Balance (as defined in the Loan Agreement), redemption price or interest and for all other purposes whatsoever, and the City shall not be affected by any notice to the contrary. 2.9 Limitation on Note Transfers. The Note will be issued to an "accredited investor" and without registration under state or other securities laws, pursuant to an exemption for such issuance; and accordingly the Note may not be assigned or transferred in whole or part, nor may a participation interest in the Note be given pursuant to any participation agreement, except to another "accredited investor" or "financial institution" in accordance with an applicable exemption 172994853v4 6 from such registration requirements and with full and accurate disclosure of all material facts to the prospective purchaser(s) or transferee(s). 2.10 Issuance of a New Note. Subject to the provisions of Section 2.9, the City shall, at the request and expense of the Lender, issue a new note, in aggregate outstanding principal amount equal to that of the Note surrendered, and of like tenor except as to number, principal amount, and the amount of the periodic installments payable thereunder, and registered in the name of the Lender or such transferee as may be designated by the Lender. SECTION 3. GENERAL COVENANTS. 3.1 Payment of Principal and Interest. The City covenants that it will promptly pay or cause to be paid the principal of and interest on the Note at the place, on the dates, solely from the source and in the manner provided herein and in the Note. The principal and interest are payable solely from and secured by revenues and proceeds derived from the Loan Agreement, the Pledge Agreement and the Mortgage, which revenues and proceeds are hereby specifically pledged to the payment thereof in the manner and to the extent specified in the Note, the Loan Agreement, the Pledge Agreement and the Mortgage; and nothing in the Note or in this Resolution shall be considered as assigning, pledging or otherwise encumbering any other funds or assets of the City. 3.2 Performance of and Authority for Covenants. The City covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in this Resolution, in the Note executed, authenticated and delivered hereunder and in all proceedings of the City Council pertaining thereto; that it is duly authorized under the Constitution and laws of the State of Minnesota including particularly and without limitation the Acts, to issue the Note authorized hereby, pledge the revenues and assign the Loan Agreement in the manner and to the extent set forth in this Resolution, the Note, the Loan Agreement, the Pledge Agreement, and the Mortgage; that all action on its part for the issuance of the Note and for the execution and delivery thereof has been duly and effectively taken; and that the Note in the hands of the Lender is and will be a valid and enforceable special limited obligation of the City according to the terms thereof. 3.3 Enforcement and Performance of Covenants. The City agrees to enforce all covenants and obligations of the Borrower under the Loan Agreement upon request of the Lender and being indemnified to the satisfaction of the City for all expenses and claims arising therefrom, and to perform all covenants and other provisions pertaining to the City contained in the Note and the Loan Agreement and subject to Section 3.4. 3.4 Nature of Security. Notwithstanding anything contained in the Note, the Loan Agreement, the Pledge Agreement or any other document referred to in Section 2.4 to the contrary, under the provisions of the Act the Note may not be payable from or be a charge upon any funds of the City other than the revenues and proceeds pledged to the payment thereof, nor shall the City be subject to any liability thereon, nor shall the Note otherwise contribute or give rise to a pecuniary liability of the City or, to the extent permitted by law, any of the City's officers, employees and agents. No holder of the Note shall ever have the right to compel any exercise of the taxing power of the City to pay the Note or the interest thereon, or to enforce payment thereof against any property of the City other than the revenues pledged under the Pledge Agreement; and 172994853v4 7 the Note shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City; and the Note shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation; but nothing in the Act impairs the rights of the Lender to enforce the covenants made for the security thereof as provided in this Resolution, the Loan Agreement and the Pledge Agreement, and in the Act, and by authority of the Act the City has made the covenants and agreements herein for the benefit of the Lender; provided that in any event, the agreement of the City to perform or enforce the covenants and other provisions contained in the Note, the Loan Agreement and the Pledge Agreement shall be subject at all times to the availability of revenues under the Loan Agreement sufficient to pay all costs of such performance or the enforcement thereof, and the City shall not be subject to any personal or pecuniary liability thereon. 3.5 Qualified Tax Exempt Obligation. In order to qualify the Note as a "qualified tax- exempt obligation" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), the City hereby makes the following factual statements and representations; (a) the Note is not treated as a "private activity bond" under Section 265(b)(3) of the Code; (b) the City hereby designates the Note as a qualified tax-exempt obligation for purposes of Section 265(b)(3) of the Code; (c) the reasonably anticipated amount of tax-exempt obligations (other than obligations described in clause (ii) of Section 265(b)(3)(C) of the Code) which will be issued by the City (and all entities whose obligations will be aggregated with those of the City) during the calendar year 2025 will not exceed $10,000,000; (d) not more than $10,000,000 of obligations issued by the City during the calendar year 2025 have been designated for purposes of Section 265(b)(3) of the Code; and (e) the aggregate face amount of the Note does not exceed $10,000,000. SECTION 4. MISCELLANEOUS. 4.1 Severability. If any provision of this Resolution shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions of any constitution or statute or rule or public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever. The invalidity of any one or more phrases, sentences, clauses or paragraphs in this Resolution contained shall not affect the remaining portions of this Resolution or any part thereof. 4.2 Authentication of Transcript. The officers of the City are directed to furnish to Bond Counsel certified copies of this Resolution and all documents referred to herein, and 172994853v4 8 affidavits or certificates as to all other matters which are reasonably necessary to evidence the validity of the Note. All such certified copies, certificates and affidavits, including any heretofore furnished, shall constitute recitals of the City as to the correctness of all statements contained therein. 4.3 Authorization to Execute Agreements. The forms of the proposed Loan Agreement and Pledge Agreement are hereby approved in substantially the form presented to the City Council, together with such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by Bond Counsel prior to the execution of the documents. The Mayor and the City Administrator of the City are authorized to execute the Loan Agreement and the Pledge Agreement and such other documents as Bond Counsel consider appropriate in connection with the issuance of the Note, in the name of and on behalf of the City. In the event of the absence or disability of the Mayor or the City Administrator such officers of the City as, in the opinion of the City Attorney, may act on their behalf, shall without further act or authorization of the City Council do all things and execute all instruments and documents required to be done or executed by such absent or disabled officers. The execution of any instrument by the appropriate officer or officers of the City herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. 172994853v4 9 Adopted by the City Council of the City of Hugo, Minnesota, this 7th day of July, 2025. _______________________________________ Mayor ATTEST: City Administrator The motion for the adoption of the foregoing resolution was duly seconded by Member ________________________, and after full discussion thereof and upon vote being taken thereon, the following voted in favor thereof: and the following voted against the same: whereupon said resolution was declared duly passed and adopted. 172994853v4 10 STATE OF MINNESOTA COUNTY OF WASHINGTON CITY OF HUGO I, the undersigned, being the duly qualified and acting City Administrator of the City of Hugo, Minnesota, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of minutes with the original thereof on file in my office, and that the same is a full, true and complete transcript of the minutes of a meeting of the City Council duly called and held on the date therein indicated, insofar as such minutes relate to a resolution authorizing the issuance of a revenue note to finance a project for Legacy Christian Academy. WITNESS my hand this ____ day of July, 2025. _______________________________________ City Administrator 172981943v5 Taft Draft June 27, 2025 LOAN AGREEMENT BETWEEN CITY OF HUGO, MINNESOTA AND LEGACY CHRISTIAN ACADEMY Dated as of September [__], 2025 Except for certain reserved rights, the interest of the City of Hugo, Minnesota, in this Loan Agreement has been pledged and assigned to Falcon National Bank, pursuant to a Pledge Agreement of even date herewith. This instrument was drafted by: Taft Stettinius & Hollister LLP (CJC) 2200 IDS Center 80 South 8th Street Minneapolis, Minnesota 55402 172981943v5 Table of Contents Page i ARTICLE I DEFINITIONS, EXHIBITS AND RULES OF INTERPRETATION ............ 1 Section 1.1 Definitions............................................................................................ 1 Section 1.2 Rules of Interpretation ......................................................................... 5 ARTICLE II REPRESENTATIONS .................................................................................... 7 Section 2.1 Representations by the City ................................................................. 7 Section 2.2 Representations by the Borrower ......................................................... 8 ARTICLE III THE LOAN .................................................................................................... 12 Section 3.1 Amount and Source of Loan .............................................................. 12 Section 3.2 Documents and Payments Required Prior to Disbursement of the Loan ............................................................................................. 12 Section 3.3 Advance and Disbursement of the Loan ............................................ 13 Section 3.4 Repayment ......................................................................................... 15 Section 3.5 Borrower’s Obligations Unconditional .............................................. 15 ARTICLE IV BORROWER’S COVENANTS .................................................................... 16 Section 4.1 Indemnity ........................................................................................... 16 Section 4.2 Continuing Existence and Qualification ............................................ 16 Section 4.3 Reports to Governmental Agencies ................................................... 17 Section 4.4 Security for the Loan ......................................................................... 17 Section 4.5 Preservation of Tax Exemption ......................................................... 17 Section 4.6 Lease or Sale of Facility .................................................................... 20 Section 4.7 Facility Operation and Maintenance Expenses .................................. 21 Section 4.8 Notification of Changes ..................................................................... 21 Section 4.9 Financial Information and Reporting ................................................. 22 Section 4.10 Financial Covenants ........................................................................... 22 Section 4.11 Access to Land and Facility ............................................................... 23 Section 4.12 Access to Books and Inspection ........................................................ 23 Section 4.13 IRS Audit Expenses ........................................................................... 23 Section 4.14 Reports to City ................................................................................... 24 Section 5.1 Prepayment at Option of Borrower .................................................... 25 ARTICLE VI EVENTS OF DEFAULT AND REMEDIES ................................................ 26 Section 6.1 Events of Default ............................................................................... 26 Section 6.2 Remedies ............................................................................................ 27 Section 6.3 Disposition of Funds .......................................................................... 28 Section 6.4 Manner of Exercise ............................................................................ 28 Section 6.5 Attorneys’ Fees and Expenses ........................................................... 29 Section 6.6 Effect of Waiver ................................................................................. 29 ARTICLE VII GENERAL ..................................................................................................... 30 172981943v5 Table of Contents (continued) Page ii Section 7.1 Notices ............................................................................................... 30 Section 7.2 Binding Effect .................................................................................... 30 Section 7.3 Severability ........................................................................................ 30 Section 7.4 Amendments, Changes and Modifications ........................................ 30 Section 7.5 Execution Counterparts ...................................................................... 30 Section 7.6 Limitation of City’s Liability ............................................................. 31 Section 7.7 City’s Attorneys’ Fees and Costs ....................................................... 31 Section 7.8 Release ............................................................................................... 31 Section 7.9 Pledge and Assignment by City and Survivorship of Obligations ......................................................................................... 31 Section 7.10 Required Approvals ........................................................................... 32 Section 7.11 Termination Upon Retirement of Note .............................................. 32 Section 7.12 Expenses of Lender ............................................................................ 32 Section 7.13 Entire Agreement ............................................................................... 33 Section 7.14 Further Assurances............................................................................. 33 Section 7.15 Waiver of Jury Trial ........................................................................... 33 Section 7.16 Governing Law and Construction ...................................................... 33 Section 7.17 Consent to Jurisdiction and Venue .................................................... 33 Section 7.18 USA Patriot Act ................................................................................. 34 Section 7.19 Non-Responsibility ............................................................................ 34 172981943v5 THIS LOAN AGREEMENT dated as of September [__], 2025, between the City of Hugo, Minnesota, a municipal corporation and political subdivision of the State of Minnesota (the “City”), and Legacy Christian Academy, a Minnesota nonprofit corporation (the “Borrower”), WITNESSES that the City and the Borrower each in consideration of the representations, covenants and agreements of the other as set forth herein, mutually represent, covenant and agree as follows: ARTICLE I DEFINITIONS, EXHIBITS AND RULES OF INTERPRETATION Section 1.1 Definitions. In this Agreement the following terms have the following respective meanings unless the context hereof clearly requires otherwise: Act: Minnesota Statutes, Sections 469.152 to 469.165, as amended; Advance: funds paid at Closing by Lender as purchase price of the Note, either directly or through Title, for the costs of the Project; Agreement: this Loan Agreement between the City and the Borrower as the same may from time to time be amended or supplemented as herein provided; Assignment: the Assignment of Leases and Rents of event date herewith executed by the Borrower in favor of the Lender; Bond Counsel: the firm of Taft Stettinius & Hollister LLP, of Minneapolis, Minnesota, or any other nationally recognized bond counsel, and any opinion of Bond Counsel shall be a written opinion signed by such Bond Counsel; Borrower: Legacy Christian Academy, its successors and assigns, and any surviving, resulting or transferee business entity which may assume its obligations in accordance with the provisions of this Agreement; Capital Expenditures: any expenditures made directly or indirectly for the purpose of acquiring or constructing fixed assets, real property or equipment which would be added as a debit to the fixed assets account of Borrower, including, without limitation, amounts paid or payable under any conditional sale or other title retention agreement or under any lease or other periodic payment arrangement which is of such a nature that payment obligations of the lessee or obligor thereunder would be required to be capitalized and shown as liabilities on the balance sheet of such lessee or obligor; City: the City of Hugo, Minnesota, its successors and assigns; Closing: the date there is physical delivery of the Note to the Lender and payment therefor; Code: the Internal Revenue Code of 1986, as amended and the temporary, final, or proposed regulations promulgated thereunder; 172981943v5 2 Counsel: an attorney designated by or acceptable to the Lender, duly admitted to practice law before the highest court of any state; an attorney for the Borrower or the City may be eligible for appointment as Counsel; Date of Taxability: this term shall have the meaning ascribed to it in Section 4.5(2) hereof; Debt: collectively, without duplication, (a) all items that, in accordance with GAAP, would be included in the liability side of a balance sheet as of the Borrower’s fiscal year end, excluding capital stock, surplus, capital and earned surplus, (b) all debt secured by any mortgage, pledge, security interest or lien existing on property owned subject to such mortgage, pledge, security interest or lien, and (c) all amounts representing the capitalization of rentals, all in accordance with GAAP; provided, however, that leases that would have been treated as operating leases under GAAP prior to December 31, 2019, shall not constitute Debt, regardless of when incurred. Debt Service: with respect to any period, the sum of all due and owing payments of principal on liabilities for borrowed money and interest expense, all determined in accordance with GAAP; Determination of Taxability: this term shall have the meaning ascribed to it in Section 4.5(2) hereof; Equity Injection: the cash paid by the Borrower at Closing for Issuance Expenses; Event of Default: any of the events described in Section 6.1 hereof; Facility: that certain private pre-K–12 school facility known as Legacy Christian Academy located at 3037 Bunker Lake Blvd NW in the City of Andover, Minnesota; GAAP: generally accepted accounting principles, consistently applied; Issuance Expenses: shall mean any and all costs and expenses relating to the issuance, sale, and delivery of the Note, including, but not limited to, any fees of the Lender, all fees and expenses of legal counsel, financial consultants, feasibility consultants and accountants, any fee to be paid to the City, the preparation and printing of this Agreement, the Mortgage, the Resolution, the Pledge Agreement, the Note and all other related documents, and all other expenses relating to the issuance, sale and delivery of the Note and any other costs which are treated as “issuance costs” within the meaning of Section 147(g) of the Code; Land: the real property described in the Mortgage including in Exhibit A thereto; Lender: Falcon National Bank, a national banking association, its successors and assigns; Loan: the loan of proceeds of the Note from the City to the Borrower described in Section 3.1 of this Agreement; Loan Documents: this Agreement, the Note, the Mortgage, the Assignment, the Security Agreement, and all other documents required by the Lender in connection with or as security for the Loan. 172981943v5 3 Long Term Debt: any Debt incurred, assumed or guaranteed by the Borrower maturing more than 365 days after it is incurred, including the sale of accounts receivable with recourse to the Borrower but only until such receivables are collected and excluding current maturities of Long Term Debt. Mortgage: the Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Financing Statement dated as of the date hereof, between the Borrower, as mortgagor, and the Lender, as mortgagee, including any amendment thereof or supplement thereto; Note: the $5,500,000.00 Educational Facilities Revenue Note, Series 2025 (Legacy Christian Academy Project) to be issued by the City pursuant to the Resolution; Pledge Agreement: the Pledge Agreement of even date herewith between the City and the Lender pledging and assigning the City’s interest in this Agreement to the Lender to the extent provided therein; Principal Balance: so much of the principal sum on the Note as from time to time remains unpaid; Project: collectively, (i) financing, in part, the acquisition of the Land and improvements thereon for the purpose of the expansion and continued operation of the Facility; and (ii) paying all or a portion of Issuance Expenses; Resolution: the Resolution No. 2025-[__] of the City, adopted July 7, 2025, authorizing the issuance of the Note together with any supplement or amendment thereto; Security Agreement: the Security Agreement of even date herewith executed by the Borrower in favor of the Lender. State: the State of Minnesota; Subordinated Debt: any liabilities of the Borrower for borrowed money which have been subordinated in right of payment and priority to the Note and to any other Debt in favor of the Lender from time to time, all on terms and conditions satisfactory to the Lender; Taxable Rate: as defined in the Note; Title: All American Title Company, or other title agency or title insurer acceptable to Lender; and Treasury Regulations: all proposed, temporary or permanent federal income tax regulations then in effect and applicable. Section 1.2 Rules of Interpretation. (1) This Agreement shall be interpreted in accordance with and governed by the laws of the State of Minnesota; 172981943v5 4 (2) The words “herein” and “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 particular section or subdivision hereof; (3) References herein to any particular section or subdivision hereof are to the section or subdivision of this instrument as originally executed; (4) Where the Borrower is permitted or required to do or accomplish any act or thing hereunder, the City may cause the same to be done or accomplished with the same force and effect as if done or accomplished by the Borrower; (5) The Table of Contents and titles of articles and sections herein are for convenience only and are not a part of this Agreement; (6) Unless the context hereof clearly requires otherwise, the singular shall include the plural and vice versa and the masculine shall include the feminine and vice versa; (7) Articles, sections, subsections and clauses mentioned by number only are those so numbered which are contained in this Agreement; (8) References to the Note as “tax exempt” or to the “tax exempt status of the Note” are to the exclusion of interest on the Note from gross income pursuant to Section 103(a) of the Code; and (9) The words “include,” “including” and the like mean “including without limitation” and, when followed by any specific item(s), are deemed to refer to examples rather than to be words of limitation. [Remainder of page intentionally left blank.] 172981943v5 5 ARTICLE II REPRESENTATIONS Section 2.1 Representations by the City. The City makes the following representations as the basis for its covenants herein: (1) The City is a duly organized and existing municipal corporation and political subdivision pursuant to the laws of the State of Minnesota and is authorized to issue the Note to finance the costs of the Project pursuant to the Act; (2) In authorizing the Project the City’s purpose is, and in its judgment the effect thereof will be, to promote the public welfare by: the attraction, encouragement and development of economically sound industry and commerce so as to prevent, so far as possible, the emergence of blighted and marginal lands and areas of chronic unemployment and to aid in the redevelopment of areas of existing blight, marginal land and persistent unemployment; the development of industry to use the available resources of the community, in order to retain the benefit of the community’s existing investment in educational facilities; halting the movement of talented, educated personnel of mature age to other areas and thus preserving the economic and human resources needed as a base for providing governmental services and facilities; providing accessible employment opportunities for residents in the area; providing education; and the expansion of an adequate tax base in the area to finance the increase in the amount and cost of governmental services; (3) [Intentionally Omitted]; (4) On July 7, 2025, after due publication of notice of hearing in the City’s official newspaper, a newspaper of general circulation in the City, the City Council held a public hearing on the Project, prepared pursuant to the Act and Section 147(f) of the Code in connection with the issuance of the Note, and, on July 7, 2025, duly adopted a resolution approving the issuance of the Note; (5) The issuance and sale of the Note, the execution and delivery of this Agreement and the Pledge Agreement, and the performance of all covenants and agreements of the City contained in this Agreement, the Note and the Pledge Agreement, and of all other acts and things required under the Constitution and laws of the State of Minnesota to make this Agreement, the Pledge Agreement and Note valid and binding obligations of the City in accordance with their terms, are authorized by the Act and have been duly authorized by a resolution of the governing body of the City adopted at a meeting thereof duly called and held on July 7, 2025, by the affirmative vote of not less than a majority of its members; (6) Pursuant to the Resolution, the City has authorized and directed the Lender to disburse the proceeds of the Note directly to the Borrower and such other parties as may be entitled to payment or reimbursement for the costs of the Project, upon receipt of such supporting documentation as the Lender may deem reasonably necessary or as required by this Agreement; 172981943v5 6 (7) No public official of the City has either a direct or indirect financial interest in this Agreement nor will any public official either directly or indirectly benefit financially from this Agreement; (8) There is no pending or, to the City’s actual knowledge, without inquiry or investigation, threatened suit, action, or proceeding against the City before any court, arbitrator, administrative agency, or other governmental authority that challenges the City’s execution and delivery of this Agreement, the Note, and the Pledge Agreement; (9) To the actual knowledge of the City, without inquiry or investigation, the execution and delivery of this Agreement, the Note, and the Pledge Agreement will not constitute a breach of or default under any existing (a) provision of any special legislative act or charter provision relating to the establishment of the City or (b) agreement, indenture, mortgage, lease, or other instrument to which the City is a party or by which it is bound; and (10) No proceeding of the City for the issuance, execution, or delivery of this Agreement, the Note, or the Pledge Agreement has been repealed, rescinded, amended, or revoked and the Lender is entitled to rely on the same as if the same were fully incorporated herein, including without limitation, the Resolution. Section 2.2 Representations by the Borrower. The Borrower makes the following representations as the basis for its covenants herein: (1) The Borrower is a Minnesota nonprofit corporation duly incorporated and in good standing under the laws of the State of Minnesota, is duly authorized to conduct its business in all states where its activities require such authorization, has power to enter into the Loan Documents and to use the Project for the purpose set forth in this Agreement and by proper corporate action has authorized the execution and delivery of the Loan Documents; (2) The Borrower is an organization described in Section 501(c)(3) of the Code and is exempt from tax under Section 501(a) of the Code. The Borrower is not a “private foundation” as defined in Section 509(a) of the Code. Not more than five percent (5%) of the proceeds of the Note will be used, directly or indirectly, to finance or refinance property used in an unrelated trade or business of the Borrower determined by applying Section 513(a) of the Code or in the trade or business of any person other than an organization described in Section 501(c)(3) of the Code. There is no action, proceeding or investigation pending or threatened by the Internal Revenue Service or authorities of the State of Minnesota which, if adversely determined, might result in a modification of the status of the Borrower as an organization described in Section 501(c)(3) of the Code; (3) The execution and delivery of the Loan Documents; the consummation of the transactions contemplated thereby; and the fulfillment of the terms and conditions thereof do not and will not conflict with or result in a breach of any of the terms or conditions of the Borrower’s articles of incorporation, its bylaws, any restriction or any agreement or instrument to which the Borrower is now a party or by which it is bound or to which any property of the Borrower is subject, and do not and will not constitute a default under any of the foregoing or a violation of any order, decree, statute, rule or regulation of any court or of any state or federal regulatory body 172981943v5 7 having jurisdiction over the Borrower or its properties, including the Facility, and do not and will not result in the creation or imposition of any lien, charge or encumbrance of any nature upon any of the property or assets of the Borrower contrary to the terms of any instrument or agreement to which the Borrower is a party or by which it is bound; (4) [To the actual knowledge of the Borrower, as] [As] of the date hereof, the use of the Facility as designed and to be operated complies, in all material respects, with all presently applicable development, pollution control, water conservation and other laws, regulations, rules and ordinances of the federal government and the State of Minnesota and the respective agencies thereof and the political subdivisions in which the Facility is located. The Borrower has obtained, or will obtain in a timely manner, all necessary and material approvals of and licenses, permits, consents and franchises from federal, state, county, municipal or other governmental authorities having jurisdiction over the Facility to operate the Facility and to enter into, execute and perform its obligations under this Agreement, and the Mortgage; and[, to the actual knowledge of the Borrower,] no violation of any local ordinance, laws, regulation or requirement exists with respect to the Land; (5) The proceeds of the Note, together with the Equity Injection and any other funds to be contributed to the Project by the Borrower or otherwise in accordance with this Agreement, will be sufficient to pay the costs of the Project, and the proceeds of the Note will be used only for the purposes contemplated hereby and allowable under the Act; (6) Comparable private financing for the Project was not found by the Borrower to be reasonably available, and the Project is economically more feasible with the availability of the financing herein authorized; (7) The Borrower is not in the trade or business of selling properties such as the Facility and is undertaking the Project for investment purposes only or otherwise for use by the Borrower in its trade or business, and therefore the Borrower has no intention now or in the foreseeable future to voluntarily sell, surrender or otherwise transfer, in whole or part, its interest in the Facility; (8) There are no actions, suits, or proceedings pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any property of the Borrower in any court or before any federal, state, municipal or other governmental agency, which, if decided adversely to the Borrower would have a material adverse effect upon the Borrower or upon the business or properties of the Borrower; and the Borrower is not in default with respect to any order of any court or governmental agency; (9) The Borrower is not in default in the payment of the principal of or interest on any indebtedness for borrowed money nor in default under any instrument or agreement under and subject to which any indebtedness for borrowed money has been issued; (10) The Borrower has filed all federal and state income tax returns which, to the knowledge of the officers of the Borrower, are required to be filed and has paid all taxes shown on said returns and all assessments and governmental charges received by the Borrower to the extent that they have become due; 172981943v5 8 (11) No public official of the City has either a direct or indirect financial interest in this Agreement nor will any public official either directly or indirectly benefit financially from this Agreement; (12) The Borrower has approved the terms and conditions of the Note; (13) The Borrower intends to operate the Facility as a private pre-k–12 school facility until the date on which the entire Principal Balance of the Note has been fully paid and is no longer outstanding; (14) Each document executed by the Borrower in connection with the Loan constitutes the legal, valid, and binding obligation of the Borrower, enforceable in accordance with its terms (subject, as to enforceability, to limitations resulting from bankruptcy, insolvency and other similar laws affecting creditors’ rights generally); (15) The financial statements of the Borrower heretofore furnished to the Lender are complete and correct in all material respects and fairly present the financial condition of the Borrower at the date of such statement. Since the most recent set of financial statements delivered by the Borrower to the Lender, there have been no material adverse changes in the financial condition of the Borrower; (16) No consent, approval, order or authorization of, or registration, declaration, or filing with, or notice to, any governmental authority or any third party is required in connection with the execution and delivery of this Agreement, or any of the agreements or instruments herein mentioned or related hereto to which the Borrower is a party or the carrying out or performance of any of the transactions required or contemplated hereby or thereby or, if required, such consent, approval, order or authorization has been (or, with respect to the filing of the Form 8038 with the Internal Revenue Service, will be) obtained or such registration, declaration or filing has been or will be accomplished or such notice has been or will be given; (17) The Borrower has good title to the Land, free and clear of all mortgages, liens and encumbrances, except the Permitted Encumbrances (as described in the Mortgage). When timely and properly recorded, the Mortgage will constitute a valid and perfected first mortgage lien on the Land; (18) The Land and Facility are in substantial compliance with the accessibility guidelines set forth in Title III of The Americans with Disabilities Act of 1990, as the same may be amended from time to time, and any rules and regulations promulgated thereunder (the “ADA”); (19) Denominational adherence is not required for employment at the Facility; and (20) No portion of the facilities being financed with proceeds of the Note is designed for or shall be used in whole or in part as a place for devotional activities, religious worship or sectarian education, instruction, or indoctrination, which sectarian facilities have been financed with other funds available to the Borrower and not from proceeds of the Note. 172981943v5 9 ARTICLE III THE LOAN Section 3.1 Amount and Source of Loan. The City has authorized the issuance of the Note in the principal amount of $5,500,000.00 to provide funds to the Borrower for its use in financing the Project. The Borrower agrees to acquire the Facility and the City agrees to lend the Borrower, upon the terms and conditions set forth herein, the proceeds received from the Note by causing such sums to be advanced to the Borrower and disbursed at Closing or pursuant to this Agreement. Section 3.2 Documents and Payments Required Prior to Disbursement of the Loan. Prior to any Advance of the proceeds, the Borrower shall deliver to the Lender or pay the following, as applicable: (1) The Note; (2) This Agreement; (3) The Pledge Agreement; (4) The Assignment (5) The Mortgage; (6) The Security Agreement; (7) [Intentionally Omitted]; (8) An Opinion of Counsel for the Borrower as prescribed by the Lender and Bond Counsel; (9) An Opinion of Bond Counsel, to the effect that the City has duly authorized the Note and that the interest thereon is exempt from federal income taxation and subject to other conditions acceptable to the Lender; (10) A 501(c)(3) determination letter from the Internal Revenue Service evidencing that the Borrower is exempt from income taxation under Section 501(c)(3) of the Code and such other documents and opinions as Bond Counsel may reasonably require for purposes of rendering its opinion required in subsection (9) above; (11) Such other agreements, assignments, security agreements, guaranties, financing statements, indemnities, opinions, and other instruments evidencing or securing the Loan as may be required by the Lender; (12) Any certification, instrument, assignment or other document referenced in or required by any of the documents listed in this Section 3.2; 172981943v5 10 (13) Payment of Lender’s Loan fees of $22,000.00 with respect to the Note, plus reimbursement of the Lender’s transaction expenses; (14) A commitment or proforma title policy from Title in form and content acceptable to the Lender to issue an ALTA title policy to the Lender insuring the Mortgage as a first lien on the Land, together with true and complete copies of all documents affecting title to the Land and such endorsements to the policy as required by the Lender; (15) Payment of all Issuance Expenses; (16) Certificates of Insurance covering the Facility in form and substance acceptable to the Lender; (17) Authorizing resolution of Borrower; (18) FIRREA compliant appraisal from an appraiser selected by Lender for the Land and Facility, all in form and content acceptable to Lender; (19) The payment of the Equity Injection due at Closing; and (20) ALTA survey in form and content acceptable to the Lender. Section 3.3 Advance and Disbursement of the Loan. Pursuant to this Agreement and the Act, the City has authorized the Borrower to provide directly for the financing of the Project in such manner as determined by the Borrower and hereby authorizes the Lender to advance and disburse the proceeds of the Note directly to the Borrower or such other parties as may be entitled to payment or reimbursement in accordance with this Agreement, upon receipt of such supporting documentation as the Lender may deem reasonably necessary or as required by this Agreement. On the date hereof, $[______] of the proceeds of the Note will be advanced and disbursed for Issuance Expenses. The remaining $[_________] of the proceeds of the Note will be advanced to pay the purchase price. Notwithstanding any other provision hereof, no proceeds of the Note shall be applied to payment of the costs of any portion of the Facility that is designed for use or will be used primarily as a place for devotional activities or religious education or worship. Section 3.4 Repayment. Subject to the prepayment provisions set forth in the Note, the Borrower agrees to repay the Loan by making all payments of principal, interest and any premium, penalty or charge that are required to be made by the City under the Note at the times and in the amounts provided therein. All payments shall be made directly to the Lender as provided in the Note for the account of the City. The Borrower represents and covenants that the source of payment of the Note is from revenues derived from the operation of its business and the Facility and other funds of the Borrower obtained pursuant to its tax-exempt purposes. Section 3.5 Borrower’s Obligations Unconditional. All payments required of the Borrower hereunder shall be paid without notice or demand and without setoff, counterclaim, abatement, deduction or defense. The Borrower will not suspend or discontinue any payments, and will perform and observe all of its other agreements in this Agreement, and, except as expressly 172981943v5 11 permitted herein, will not terminate this Agreement for any cause, including but not limited to any acts or circumstances that may constitute failure of consideration, destruction or damage to the Facility, eviction by paramount title, commercial frustration of purpose, bankruptcy or insolvency of the City or the Lender, change in the tax or other laws or administrative rulings or actions of the United States of America or of the State of Minnesota or any political subdivision thereof, or failure of the City to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with this Agreement. [Remainder of page intentionally left blank.] 172981943v5 12 ARTICLE IV BORROWER’S COVENANTS Section 4.1 Indemnity. The Borrower will, to the extent permitted by law, pay, and will protect, indemnify and save the City, the Lender, and their respective officers, agents and employees harmless from and against all liabilities, losses, damages, costs, expenses (including attorneys’ fees and expenses), causes of action, suits, claims, demands and judgments of any nature arising from the following: (1) any injury to or death of any person or damage to property in or upon the Facility or growing out of or connected with the use, non-use, condition or occupancy of the Facility or a part thereof; (2) violation of any agreement or condition of this Agreement, except by the City or its assignee; (3) violation of any contract, agreement or restriction by the Borrower relating to the Facility; (4) violation of any law, ordinance or regulation affecting the Facility or a part thereof, or the ownership, occupancy or use thereof, or arising out of this Agreement, the Note or the transactions contemplated thereby, including any requirements imposed on the Lender as a financial institution or any disclosure or registration requirements imposed by any federal or state securities law; and (5) any statement or information relating to the expenditure of the proceeds of the Note contained in the non-arbitrage certificate or similar document furnished by the Borrower to the City which, at the time made, is misleading, untrue or incorrect in any material respect. Section 4.2 Continuing Existence and Qualification. Throughout the term of this Agreement the Borrower will remain duly qualified to do business as a nonprofit corporation in Minnesota, and will continue to operate as an organization described in Section 501(c)(3) of the Code whose income is exempt from taxation under Section 501(a) of the Code, and will maintain its corporate existence, will maintain its principal place of business in the State of Minnesota and continue its business as presently conducted during the term of the Loan, will not change its name or the state in which it is organized without at least thirty (30) days’ prior written notice to Lender, will not dissolve or otherwise dispose of all or substantially all of its assets, and will not consolidate with or merge into another corporation or other business entity or permit any other corporation or other business entity to consolidate with or merge into it unless (1) the surviving, resulting or transferee corporation, or other business entity, as the case may be, shall be a nonprofit corporation operating under the laws of the United States, any state or the District of Columbia, and an organization described in Section 501(c)(3) of the Code (provided the Project will not constitute an unrelated trade or business within the meaning of Section 513(a) of the Code) or a governmental unit under Section 145 of the Code; (2) the surviving, resulting or transferee corporation, or other business entity, as the case may be, if other than the Borrower, assumes in writing all of the obligations of the Borrower under this Agreement, and the Mortgage and shall deliver that 172981943v5 13 instrument to the Lender, (3) the surviving, resulting or transferee corporation or other business entity, as the case may be, is duly qualified to do business in Minnesota and (4) the Borrower first obtains the written consent of the Lender to such merger, transfer or consolidation. At least 60 days before any proposed merger, transfer or consolidation would become effective, the Borrower shall deliver to the Lender a written request seeking the Lender’s approval of such merger, transfer or consolidation, and shall thereafter promptly furnish to the Lender such information pertaining to the proposed merger, transfer, or consolidation as the Lender shall request. If the Lender approves the proposed merger, transfer or consolidation, the surviving, resulting or transferee corporation and other entity referred to in this Section 4.2 shall be bound by all of the covenants and agreements of the Borrower herein with respect to any further consolidation, merger, sale or transfer. The Lender’s approval under this Section shall not be unreasonably withheld, delayed or conditioned. Section 4.3 Reports to Governmental Agencies. The Borrower will furnish to agencies of the State of Minnesota, such periodic reports or statements as are required under the Act, or as they may otherwise reasonably require of the City or the Borrower throughout the term of this Agreement in connection with the transaction contemplated herein. Copies of such reports will be provided to the City and the Lender. Section 4.4 Security for the Loan. (1) As additional security for the Lender, and to induce the City to issue and deliver the Note, the Borrower agrees to execute and deliver (or cause to be executed and delivered) the documents described in Sections 3.2 and 3.3 hereof and agrees to meet all its obligations under such documents, which documents shall remain in effect until all payments required hereunder have been made; and the Borrower will direct Bond Counsel, the Lender or Title to cause to be recorded and filed the Mortgage, financing statements, and such other documents requested by Bond Counsel or the Lender, in such places and in such manner as Bond Counsel or the Lender deems necessary or desirable to perfect or protect the security interest of the Lender in and to the Facility and other collateral referred to in said documents. Except for Permitted Encumbrances and as otherwise may be provided in the Mortgage, the Borrower will not further encumber the property pledged therein without the Lender’s prior written consent; and (2) The obligation of the Borrower to make payments hereunder is a general full faith and credit obligation of the Borrower payable from all revenues and assets of the Borrower. Section 4.5 Preservation of Tax Exemption. (1) The Borrower covenants and agrees that, in order to assure that the interest on the Note shall at all times be free from federal income taxation, the Borrower represents and covenants with the City and the Lender that it will comply with the applicable provisions of Section 103 and Sections 141 through 150 of the Code and as follows: (a) The Facility is and will continue to be owned and operated by the Borrower, and no portion of the Facility is managed by anyone other than the Borrower or a governmental entity or an organization described in Section 501(c)(3) of the Code or 172981943v5 14 pursuant to a “qualified management agreement” within the meaning of all pertinent provisions of law, including all relevant provisions of the Code and regulations, rulings and revenue procedures thereunder, including Revenue Procedure 2017-13; (b) The Facility will not be used by the Borrower in an unrelated trade or business, determined by the application of Section 513(a) of the Code; (c) No more than five percent (5%) of the net proceeds of the Note is to be used for any private business use as defined in Section 141(b)(6) of the Code; (d) The payment of the principal of, or interest on, no more than five percent (5%) of the net proceeds of the Note is (under the terms of the Note or any underlying arrangement) directly or indirectly (a) secured by any interest in (i) property used or to be used for a private business use, or (ii) payments in respect of such property, or (b) to be derived from payments (whether or not to the City) in respect of property, or borrowed money, used or to be used for a private business use; (e) The aggregate authorized face amount of the Note (when increased by any outstanding tax-exempt “qualified 501(c)(3) bonds” issued prior to 1997, other than “qualified hospital bonds,” of the Borrower, or any organization with which the Borrower is under common management or control and is a test-period beneficiary determined in accordance with Section 145(b) of the Code) does not exceed $150,000,000 or, alternatively, at least 95% of the net proceeds of the Note will be used for Capital Expenditures; (f) The weighted average maturity of the Note will not exceed the estimated economic life of the Facility by more than twenty percent (20%), all within the meaning of Section 147(b) of the Code; (g) While the Note remains outstanding, no portion of the proceeds of the Note will be used to provide any airplane, skybox or other private luxury box, any facility primarily used for gambling, or a store, the principal business of which is the sale of alcoholic beverages for consumption off premises; (h) Not more than 2% of the proceeds of the Note will be used to finance Issuance Expenses; (i) The Borrower agrees it will not use the proceeds of the Note in such a manner as to cause the Note to be an “arbitrage bond” within the meaning of Section 148 of the Code and applicable Treasury Regulations. The Borrower shall: (i) maintain records identifying all “gross proceeds” and “replacement proceeds” (as defined in Section 148(f)(6)(B)) of the Code attributable to the Note, the yield at which such gross proceeds are invested, any arbitrage profit derived therefrom (earnings in excess of the yield on the Note) and any earnings derived from the investment of such arbitrage profit; 172981943v5 15 (ii) make, or cause to be made as of the end of each fifth bond year, the annual determinations of the amount, if any, of excess arbitrage required to be paid to the United States, unless the Borrower obtains an Opinion of Bond Counsel to the effect that such calculations need not be made (the “Rebate Amount”); (iii) pay, or cause to be paid, to the United States at least once every fifth bond year the amount, if any, which is required to be paid to the United States, including the last installment which shall be made no later than 60 days after the day on which the Note is paid in full; (iv) not invest, or permit to be invested, “gross proceeds” of the Note in any acquired nonpurpose obligations so as to deflect arbitrage otherwise payable to the United States as a “prohibited payment” to a third party; and (v) if applicable, retain all records of the determination of the foregoing amounts until six (6) years after the Note has been fully paid. Unless the Opinion of Bond Counsel described in (ii) above is provided, the Borrower agrees that, in order to comply with this paragraph (i), it shall determine the Rebate Amount within 30 days after each fifth year of the anniversary of the Closing and upon payment in full of the Note; upon request, the Borrower shall furnish the Lender a certificate showing how such calculation was made. (j) The Borrower has not leased, sold, assigned, granted or conveyed and will not lease, sell, assign, grant or convey all or any portion of the Facility or any interest therein to the United States or any agency or instrumentality thereof within the meaning of Section 149(b) of the Code; (k) In addition to the Note, no other obligations have been or will be issued under Section 103 of the Code which are sold at substantially the same time as the Note pursuant to a common plan of marketing and at substantially the same rate of interest as the Note and which are payable in whole or part by the Borrower or otherwise have with the Note any common or pooled security for the payment of debt service thereon, or which are otherwise treated as the same “issue of obligations” as the Note as described in Treasury Regulations Section 1.150-(1)(c)(1); (l) No proceeds of the Note shall be invested in investments which cause the Note to be federally guaranteed within the meaning of Section 149(b) of the Code. If at any time the moneys in such funds exceed, within the meaning of Section 149(b)(3)(B) of the Code, (i) amounts invested for an initial temporary period until the moneys are needed for the purpose for which the Note was issued, (ii) investments of a bona fide debt service fund, and (iii) investments of a reserve which meet the requirement of Section 148(d) of the Code, such excess moneys shall be invested in only those investments, which are (A) obligations issued by the United States Treasury, (B) other investments permitted under regulations, or (C) obligations which are (a) not issued by, or guaranteed by, or insured by, the United States or any agency or instrumentality thereof or (b) not federally insured deposits or accounts, all within the meaning of Section 149(b) of the Code; 172981943v5 16 (m) The Borrower shall not otherwise use proceeds of the Note, or take or fail to take any action within its control, the effect of which would be to impair the exemption of interest on the Note from federal income taxation; and (n) The Borrower shall maintain such written procedures as appropriate and applicable to ensure Borrower’s principal responsibility for compliance with the post- issuance requirements necessary to maintain the tax-exempt status of the interest on the Note, including requirements that must be continually monitored, including (i) monitoring the investment (pending expenditure) of Note proceeds (and keep detailed records thereof) in order to assure compliance with the arbitrage requirements applicable to the Note, (ii) monitoring the expenditures of the Note proceeds (and keep detailed records thereof), (iii) monitoring the use of the financed facility in order to ensure that the Note continues to qualify as a qualified 501(c)(3) bond within the meaning of Section 145 of the Code, (iv) periodically consulting with Bond Counsel with respect to arbitrage issues and compliance, and (v) consulting with Bond Counsel as necessary to determine whether, and to what extent, any change in the use or purpose of the financed facility will require any remedial action under the relevant Treasury Regulation; (2) For the purpose of this Section, a “Determination of Taxability” shall mean the issuance of a statutory notice of deficiency by the Internal Revenue Service, or a ruling of the National Office or any District Office of the Internal Revenue Service, or a final decision of a court of competent jurisdiction, or a change in any applicable federal statute, which holds or provides in effect that the interest payable on the Note is includible, for federal income tax purposes under Section 103 of the Code in the gross income of the Lender or any other holder or prior holder of the Note for any reason, including but not limited to the Note failing to qualify as a “qualified tax exempt obligation” within the meaning of Section 265(b)(3) of the Code, if the period, if any, for contest or appeal of such action, ruling or decision by the Borrower or Lender or any other interested party has expired without any such contest or appeal having been properly instituted by the Lender, the Borrower or any other interested party. The expenses of any such contest shall be paid by the party initiating the contest, and neither the Lender nor the Borrower shall be required to contest or appeal any Determination of Taxability. The “Date of Taxability” shall mean that point in time, as specified in the determination, ruling, order, or decision, that the interest payable on the Note becomes includible in the gross income of the Lender or any other holder or prior holder of the Note, as the case may be, for federal income tax purposes; and (3) If the Borrower receives a Determination of Taxability it will promptly give notice of such Determination of Taxability to the City and the Lender and the Note shall convert to a taxable obligation at the Taxable Rate effective as of the Date of Taxability. The interest rate for interest accruing from the Date of Taxability shall be adjusted to the Taxable Rate on the date of the Determination of Taxability and the Borrower shall pay any interest accruing from the Date of Taxability which is retroactively due as a result of the interest rate adjustment on the next payment date along with regularly scheduled principal payment and interest accruing from the previous payment date at the Taxable Rate in accordance with the Note. Section 4.6 Lease or Sale of Facility. Except as otherwise may be permitted in the Mortgage, the Borrower shall not lease, sell, convey or otherwise transfer the Facility in whole or part, nor sell the Facility in whole or part, without first securing the written consent of the Lender 172981943v5 17 provided that in no event shall such lease, transfer, assignment or sale be permitted if the effect thereof would otherwise be to impair the validity or the tax exempt status of the Note, nor shall any such transaction release the Borrower of any of its obligations under this Agreement, unless the Facility is conveyed in whole and such conveyance has been approved in writing by the Lender. The Borrower shall promptly notify the City of any such sale, transfer, assignment or lease. Section 4.7 Facility Operation and Maintenance Expenses. The Borrower shall pay all expenses of the operation and maintenance of the Facility including, but without limitation, adequate insurance thereon and insurance against all liability for injury to persons or property arising from the operation thereof, and all taxes and special assessments levied upon or with respect to the Facility and payable during the term of this Agreement, all in conformance with the provisions of the Mortgage. The Borrower shall keep the Facility in good working order and condition, subject to ordinary wear and tear. The Facility shall not be used for purposes which violate any Federal, State or other laws prohibiting discrimination in access or employment based on race, creed, sex, disability, ethnic or national origin, age, marital status, or other categories for which discrimination is prohibited. The Borrower will not use any Note proceeds to pay any costs of, or attributable to, the construction or equipping of any facilities used primarily for religious instruction or worship; all such costs will be paid with the Borrower’s funds. The Borrower agrees that it will not use that portion of the Facility financed or refinanced with proceeds of the Note or any part thereof (a) for sectarian instruction or study or primarily as a place for devotional activities or religious worship or as a facility used primarily in connection with any part of a program of a school or department of divinity for any religious denomination or the training of ministers, priests, rabbis or other similar persons in the field of religion, or (b) in a manner which would violate the First Amendment to the Constitution of the United States of America, including the decisions of the United States Supreme Court interpreting the same, or any comparable provisions of the Constitution of the State of Minnesota, including the decisions in the Supreme Court of the State interpreting the same. Section 4.8 Notification of Changes. The Borrower covenants and agrees that it will promptly notify the Lender of: (1) any litigation and of all proceedings before any governmental or regulatory agency which might materially and adversely affect the Borrower or any of its properties. Any action seeking a monetary recovery in excess of $50,000 is material; (2) as promptly as practicable (but in any event not later than five business days) after an officer of Borrower obtains knowledge, the occurrence of any Event of Default under this Agreement or under any other loan agreement, debenture, note, purchase agreement or any other agreement providing for the borrowing of money by the Borrower[ or any event of which the Borrower has knowledge and which, with the passage of time or giving of notice, or both, would constitute an Event of Default under this Agreement or under such other agreements]; and (3) any material adverse change in the operations, business, properties, assets or conditions, financial or otherwise, of the Borrower. 172981943v5 18 Section 4.9 Financial Information and Reporting. Except as otherwise stated in this Agreement, all financial information provided to the Lender shall be compiled using GAAP. During the term of this Agreement, and afterward until all amounts due under this Agreement are paid in full, unless the Lender shall otherwise agree in writing, the Borrower agrees to: (1) Provide the Lender, within 150 days after Borrower’s fiscal year end, annual audited financial statements for Borrower with an unqualified opinion of an independent certified public accountant of recognizable standing selected by Borrower and approved by Lender, certified as true and correct by an officer or other authorized representative of Borrower upon request; (2) Provide the Lender, within 30 days after the end of each month, unaudited financial statements for such month; (3) [Intentionally Omitted]; (4) Provide the Lender, within 30 days after the start of each fiscal year of Borrower or more frequently as requested by the Lender, the Borrower’s projected operating budget for the next succeeding fiscal year in form and substance acceptable to Lender; (5) Provide the Lender, within 30 days after the start of each fiscal year of Borrower or more frequently as requested by the Lender, the Borrower’s enrollment figures for the school year aligning with such fiscal year in detail acceptable to Lender; and (6) Provide the Lender with such other information as it may reasonably request, and permit the Lender or its agent(s) to visit and inspect its properties and examine its books and records. Section 4.10 Financial Covenants. The Borrower covenants and agrees that while this Agreement is in effect, the Borrower shall maintain the following financial covenants: (1) Bank Accounts. The Borrower shall maintain its primary demand deposit operating accounts with the Lender during the term of the Note. The Borrower shall have six (6) months from the date of this Agreement to move the majority of its depository accounts to accounts with the Lender, with all deposit accounts transferred to the Lender within twelve (12) months from the date of this Agreement. Section 4.11 Access to Land and Facility. The Borrower grants to the Lender and to the Lender’s agents access to the Land and Facility at any reasonable time during normal business hours in order to inspect the Facility and the Borrower’s other property. Lender’s activities at the Land and Facility shall be conducted in a manner that minimizes disruption of the Borrower’s activities, taking into consideration the needs of teachers and students as reasonably understood by the Lender or as communicated by the Borrower to the Lender, and subject to the terms of any leases or licenses affecting the Land or the Facility. Section 4.12 Access to Books and Inspection. The Borrower shall keep proper books of record and accounts with respect to the use and operation of the Facility and the Borrower’s other 172981943v5 19 property, and, subject to any privacy laws applicable to Borrower, upon request of the Lender, provide any duly authorized representative of the Lender access during normal business hours to, and permit such representative to examine, copy or make extracts from, or audit any and all books, records and documents relating to the Facility, the Borrower’s affairs and to inspect any of its facilities and properties. (The Lender shall be permitted to disclose the information contained therein to its legal counsel, its independent public accountants, any participating lenders, or in connection with any action to collect any indebtedness of the Borrower or to enforce this Agreement and the documents related hereto, or as otherwise permitted or required by law). Section 4.13 IRS Audit Expenses. The Borrower agrees to pay any reasonable costs incurred by the City or the Lender as a result of the City’s or the Lender’s compliance with an audit, random or otherwise, by the Internal Revenue Service or the Minnesota Department of Revenue with respect to the Note or the Project. Section 4.14 Reports to City. Annually, not later than March 1, in every year while any portion of the Note remains outstanding, the Borrower agrees to provide a report to the City documenting the then-outstanding principal amount of the Note. This provision cannot be enforced by the Lender. [Remainder of page intentionally left blank]. 172981943v5 20 ARTICLE V PREPAYMENT OF LOAN Section 5.1 Prepayment at Option of Borrower. The Borrower may at its option prepay the Loan, in whole or in part, on any date, by paying the principal amount to be prepaid, together with accrued interest thereon as further described in the Note, subject to a prepayment premium equal to the percentages set forth below applied to the prepaid amounts of the Principal Balance of the Note, or the entire outstanding Principal Balance of the Note in the event such amount is prepaid in full: Prepayment Date Prepayment Premium Note Date through September [__], 2026 5% of Principal Prepaid September [__], 2026 through September [__], 2027 4% of Principal Prepaid September [__], 2027 through September [__], 2028 3% of Principal Prepaid September [__], 2028 through September [__], 2029 2% of Principal Prepaid September [__], 2029 through Final Maturity Date 1% of Principal Prepaid Any partial prepayment shall be applied in the order described in the Note. At the date fixed for prepayment, funds shall be paid to the Lender at its registered address appearing on the Note. Notwithstanding the foregoing, the prepayment fee shall not be assessed in the event such prepayment is made with funds from the Borrower’s own resources. 172981943v5 21 ARTICLE VI EVENTS OF DEFAULT AND REMEDIES Section 6.1 Events of Default. Any one or more of the following events is an Event of Default under this Agreement: (1) If the Borrower shall fail to make (a) any payments required under Section 3.4 of this Agreement on the date due or (b) any other payment due under this Agreement on or before the date that the payment is due and such default continues for ten days thereafter; (2) Except as elsewhere addressed in this Article VI, if the Borrower shall fail to observe and perform any other covenant, condition or agreement on its part under this Agreement for a period of 30 days after written notice, specifying such default and requesting that it be remedied, given to the Borrower by the City or the Lender, unless the default does not consist of the non-payment of money and cannot reasonably be cured within 30 days and the Lender shall agree in writing to an extension of such time prior to its expiration, or for such longer period as may be reasonably necessary to remedy such default provided that the Borrower is proceeding with reasonable diligence to remedy the same, and provided that such longer period does not place the Facility at material risk; (3) If the Borrower shall file a petition in bankruptcy or for reorganization or for an arrangement pursuant to any present or future federal bankruptcy act or under any similar federal or state law, shall consent to the entry of an order for relief pursuant to any present or future federal bankruptcy act or under any similar federal or state law, or shall make an assignment for the benefit of its creditors or shall admit in writing its inability to pay its debts generally as they become due, or if a petition or answer proposing the entry of an order for relief of the Borrower under any present or future federal bankruptcy act or any similar federal or state law shall be filed in any court and such petition or answer shall not be filed in any court and such petition or answer shall not be discharged or denied within 90 days after the filing thereof, or a receiver, trustee or liquidator of the Borrower of all or substantially all of the assets of the Borrower, or of the Facility shall be appointed in any proceeding brought against the Borrower and shall not be discharged within 90 days after such appointment or if the Borrower shall consent to or acquiesce in such appointment, or if the estate or interest of the Borrower in the Facility or a part thereof shall be levied upon or attached in any proceeding and such process shall not be vacated or discharged within 90 days after such levy or attachment; or if the Borrower shall be dissolved or liquidated or shall be merged with or is acquired by another business entity in violation of Section 4.2; (4) If the articles of incorporation of the Borrower shall expire or be annulled; or if the Borrower shall be dissolved or liquidated (other than when a new entity assumes the obligations of the Borrower under the conditions permitting such action contained in Section 4.2); (5) If any representation or warranty made by the Borrower herein, or by an officer or representative of the Borrower in any document or certificate furnished the Lender or the City in connection herewith or therewith or pursuant hereto or thereto, shall prove at any time to be, in any material respect, incorrect or misleading as of the date made; 172981943v5 22 (6) If the Borrower shall default or fail to perform any covenant, condition or agreement on its part under the Mortgage, or any other security document securing the Note, and such failure continues beyond the period set forth in such documents during which the Borrower may cure the default; (7) Any state or federal tax lien shall be filed against the Borrower and shall remain undischarged for a period of 60 days; (8) All or any portion of the Land or the Facility, or the legal, equitable or any other interest therein, shall be sold, transferred, assigned, leased, further encumbered (except as permitted herein or in the Mortgage) or otherwise disposed of, unless the prior written consent of the Lender is first obtained; provided that nothing in this Agreement prohibits the Borrower from entering into an agreement for sale of the Land and Facility where the Loan and all other amounts due under this Agreement and the other documents evidencing the Loan will be paid in full at the closing of the sale; (9) If an “Event of Default” (as such term is defined in any other agreement or obligation of the Borrower to the Lender) shall occur under any other indebtedness of the Borrower to the Lender; (10) If the Borrower, shall (a) fail to pay any indebtedness for borrowed money or any interest thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such indebtedness, or (b) fail to perform or observe any term, covenant, or condition relating to any such indebtedness when required to be performed or observed, and such failure shall not be waived and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such failure to perform or observe is to accelerate or to permit the acceleration of, with the giving of notice required, the maturity of such indebtedness; or any such indebtedness shall be declared to be due and payable or be required to be prepaid (other than the regularly scheduled prepayment) prior to the stated maturity thereof; unless provision for the payment of such debt has been made in a manner satisfactory to the Lender; (11) [Intentionally omitted]; and (12) If a default occurs under Sections 4.2, 4.5, 4.6, 4.8(2), or 4.10 hereof. Section 6.2 Remedies. Whenever any Event of Default referred to in Section 6.1 hereof shall have happened and be subsisting, any one or more of the following remedial steps to the extent permitted by law may be taken by the City with the prior written consent of the Lender or by the Lender itself: (1) The Lender’s obligation to advance or disburse any further amounts under the Note shall terminate. Notwithstanding anything to the contrary contained herein or in any other instrument evidencing or securing the Loan, the Lender may exercise the foregoing remedy upon the occurrence of an event that would constitute such an Event of Default but for the requirement that notice be given or that a period of grace or time elapse; 172981943v5 23 (2) The City, upon written direction of the Lender, or the Lender may declare all installments of the Loan (being an amount equal to that necessary to pay in full the Principal Balance plus accrued interest thereon and any premium of the Note assuming acceleration of the Note under the terms thereof and to pay all other indebtedness thereunder) to be immediately due and payable, whereupon the same shall become immediately due and payable by the Borrower; (3) The Lender may foreclose the Mortgage and proceed against the collateral described therein; (4) The Lender may exercise its rights and remedies under any security interest it holds and may, in addition to any other remedies, proceed and collect against the revenues and assets described in Section 4.4(2) herein; (5) The City, upon written direction of the Lender (except as otherwise provided in Section 7.9 herein), or the Lender (in either case at no expense to the City) may take whatever action at law or in equity may appear necessary or appropriate to collect the amounts then due and thereafter to become due under this Agreement, or to enforce performance and observance of any obligation, agreement or covenant of the Borrower under this Agreement, or the Mortgage; (6) The City, upon written direction of the Lender, or the Lender may exercise any other remedy permitted under any other instrument evidencing or securing the Loan; and (7) In addition to the remedies set forth in this Agreement, upon the occurrence of any Event of Default and thereafter while the same be continuing, the Borrower hereby irrevocably authorizes the Lender to set off all sums owing by the Borrower to the Lender against all deposits and credits of the Borrower, with, and any and all claims of the Borrower against, the Lender. Section 6.3 Disposition of Funds. Notwithstanding anything to the contrary contained in this Agreement, any amounts collected pursuant to action taken under Section 6.2 hereof, except for any amounts collected solely for the benefit of the City under any of the provisions set forth in Section 7.9, shall, after deducting (a) all expenses incurred in collecting the same and (b) then accrued interest on the Note, the remainder of such amounts, if any, be applied as a prepayment of the Note in accordance with Section 5.1 hereof. Section 6.4 Manner of Exercise. No remedy herein conferred upon or reserved to the City or the Lender is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the City or the Lender to exercise any remedy reserved to either of them in this Article, it shall not be necessary to give any notice, other than such notice as may be herein expressly required. Section 6.5 Attorneys’ Fees and Expenses. In the event the Borrower should default under any of the provisions of this Agreement and the City or the Lender should employ attorneys 172981943v5 24 or incur other expenses for the collection of amounts due hereunder or the enforcement of performance of any obligation or agreement on the part of the Borrower, the Borrower will on demand pay to the City or the Lender the reasonable fees and costs of such attorneys and such other expenses so incurred. Section 6.6 Effect of Waiver. In the event any agreement contained in this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. The Lender shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Lender and, then only to the extent specifically set forth in the writing. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. [Remainder of page intentionally left blank.] 172981943v5 25 ARTICLE VII GENERAL Section 7.1 Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when hand delivered or sent by certified or registered United States mail, return receipt requested, postage prepaid, with proper address as indicated below, or by commercial overnight delivery service with tracking service, postage prepaid, with proper address as indicated below. The City, the Borrower and the Lender may, by written notice given by each to the others, designate any address or addresses to which notices, certificates or other communications to them shall be sent when required as contemplated by this Agreement. Until otherwise provided by the respective parties, all notices, certificates and communications to each of them shall be addressed as follows: To the City: City of Hugo, Minnesota 14669 Fitzgerald Avenue North Hugo, Minnesota 55038 Attn: City Administrator To the Borrower: Legacy Christian Academy 3037 Bunker Lake Blvd NW Andover, Minnesota 55304 Attn: Head of School To the Lender: Falcon National Bank 905 6th Avenue Court NE Isanti, Minnesota 55040 Attn: Loan Department Section 7.2 Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon the City and the Borrower and their respective successors and assigns. Section 7.3 Severability. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 7.4 Amendments, Changes and Modifications. Except for amendments made to Sections 4.7, 4.8, 4.9, 4.10 and 4.14, which amendments may be made by the Borrower and the Lender without the approval or consent of the City, and except as otherwise provided in this Agreement or in the Resolution, subsequent to the Closing date and before the Note is satisfied and discharged in accordance with its terms, this Agreement may not be effectively amended, changed, modified, altered, or terminated without the prior written consent of the Lender. Section 7.5 Execution Counterparts. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 172981943v5 26 Section 7.6 Limitation of City’s Liability. It is understood and agreed by the Borrower and the Lender that no covenant of the City herein shall give rise to a pecuniary liability of the City or a charge against its general credit, or taxing powers. It is further understood and agreed by the Borrower and the Lender that the City shall incur no pecuniary liability hereunder, and shall not be liable for any expenses related hereto, including administrative expenses and fees and disbursements of the City’s attorney, Bond Counsel and fiscal consultant retained in connection therewith, all of which expenses the Borrower agrees to pay. Section 7.7 City’s Attorneys’ Fees and Costs. If, notwithstanding the provisions of Section 7.6 hereof, the City incurs any expense, or suffers any losses, claims or damages, or incurs any liabilities in connection with the transaction contemplated by this Agreement, the Borrower will indemnify and hold harmless the City from the same and will reimburse the City for any reasonable legal or other expenses incurred by the City in relation thereto. The Borrower shall also reimburse the City for all other costs and expenses, including without limitation reasonable attorneys’ fees, paid or incurred by the City in connection with (i) the discussion, negotiation, preparation, approval, execution and delivery of this Agreement, the Note, the Pledge Agreement and the documents and instruments related hereto or thereto; (ii) any amendments or modifications hereto or to the Note, the Pledge Agreement and any document, instrument or agreement related hereto or thereto, and the discussion, negotiation, preparation, approval, execution and delivery of any and all documents necessary or desirable to effect such amendments or modifications; and (iii) the enforcement by the City during the term hereof or thereafter of any of the rights or remedies of the City hereunder or under the Note, the Pledge Agreement or any document, instrument or agreement related hereto or thereto, including, without limitation, costs and expenses of collection in the Event of Default, whether or not suit is filed with respect thereto. Section 7.8 Release. The Borrower hereby acknowledges and agrees that the City shall not be liable to the Borrower, and hereby releases and discharges the City from any liability, for any and all losses, costs, expenses (including attorneys’ fees), damages, judgments, claims and causes of action, paid, incurred or sustained by the Borrower as a result of or relating to any action, or failure or refusal to act, on the part of the Lender with respect to this Agreement or the documents and transactions related hereto or contemplated hereby, including, without limitation, the exercise by the Lender of any of its rights or remedies pursuant to Article VI, the Note, the Pledge Agreement, the Mortgage or any collateral security documents. The Borrower’s release of the City pursuant to the preceding sentence does not extend to the Lender following the assignment of the City’s rights to the Lender pursuant to the Pledge Agreement. Section 7.9 Pledge and Assignment by City and Survivorship of Obligations. The City may pledge and assign its rights under this Agreement and any related documents to the Lender to secure payment of the principal of and interest and premium, if any, on the Note, conditioned upon the Lender’s assumption of the City’s and Lender’s obligations to the Borrower hereunder, except for the City’s obligations in connection with its representations in Section 2.1 hereof, which are not being assumed, but any such assignment shall not operate to limit or otherwise affect the following provisions hereof to the extent that they run to the City from the Borrower to which extent they shall survive any such assignment: Section 3.5 Section 6.5 172981943v5 27 Section 4.1 Section 7.6 Section 4.3 Section 7.7 Section 4.13 Section 4.14 Section 7.8 Upon any such pledge and assignment, the provisions immediately above running to the City from the Borrower for the City’s benefit shall run jointly and severally to the City and the Lender (if appropriate), provided that the City shall have the right to enforce any retained rights without the approval of the Lender but only upon prior written notice to the Lender and if the Lender is not enforcing such rights in a manner to protect the City or is otherwise taking action with respect thereto that brings adverse consequences to the City. The obligations of the Borrower running to the City and the Lender for the purpose of preserving the tax exempt status of the Note or otherwise for the City’s benefit under the foregoing Sections shall survive repayment of the Note and interest thereon. All other agreements, representations and warranties made in this Agreement shall survive the execution of this Agreement and the making of the Loan, and shall continue until the Lender receives payment in full of all indebtedness of the Borrower incurred under this Agreement. Section 7.10 Required Approvals. Consents and approvals required by this Agreement to be obtained from the Borrower, the City or the Lender shall be in writing and shall not be unreasonably withheld or delayed. Section 7.11 Termination Upon Retirement of Note. At any time when no Principal Balance on the Note remains outstanding, and arrangements satisfactory to the Lender and the City have been made for the discharge of all other accrued and contingent liabilities, if any, under this Agreement, this Agreement shall terminate, except as otherwise expressly provided in Section 7.9 or otherwise herein or in a separate writing signed by the Borrower, the City, and the Lender. Section 7.12 Expenses of Lender. The Borrower shall pay or reimburse the Lender for any and all costs and expenses, including, without limitation, Lender’s fee identified in Section 3.2(13) hereof, attorneys’ fees, paid or incurred by the Lender in connection with (i) review, negotiation, preparation, and approval of this Agreement and any other document or agreement related hereto or thereto or the transactions contemplated hereby; (ii) the review, negotiation, preparation, and approval of any amendments, modifications or extensions to any of the foregoing documents, instruments or agreements, and the preparation and consummation of any and all documents necessary or desirable to effect such amendments, modifications or extensions; (iii) any appraisals, environmental assessments, surveys, or other reports relating to the Land which the Lender is authorized to seek, order or prepare pursuant to this Agreement or any other instrument evidencing or securing the Loan or is required to seek, order or prepare pursuant either to applicable laws or regulations or the Lender’s policies or procedures generally applicable to commercial mortgage loans by the Lender; (iv) all title insurance premiums, filing and recording fees and mortgage registration tax paid or payable in connection with the consummation of the transaction contemplated hereby; and (v) the enforcement by the Lender during the term hereof or thereafter of any of the rights or remedies of the Lender under any of the foregoing documents, instruments or agreements or under applicable law, whether or not suit is filed with respect thereto (attorneys’ fees and costs are limited to reasonable fees and costs). 172981943v5 28 Section 7.13 Entire Agreement. This Agreement contains the entire agreement of the parties with respect to the subject matter of this Agreement and supersedes any and all prior letters, proposals, contracts and understandings between the parties with respect to the same, including, but not limited to, any proposal or commitment letter, and such letters, proposals, contracts and understandings are hereby terminated. Section 7.14 Further Assurances. At any time and from time to time, upon request by the Lender, the Borrower will make, execute and deliver or cause to be made, executed and delivered, to the Lender, any and all other further instruments, certificates and other documents as may, in the reasonable opinion of the Lender, be necessary or desirable in order to effectuate, complete, secure, or perfect, or to continue and preserve, the obligations of the Borrower hereunder and under any of the other documents related to the Loan. Upon any failure by the Borrower so to do after ten days written notice from the Lender, the Lender may make, execute and record any and all such instruments, certificates and documents for and in the name of the Borrower at the Borrower’s expense and the Borrower hereby irrevocably appoints the Lender its agent and attorney-in-fact of the Borrower so to do. The Borrower hereby understands, acknowledges and agrees that the Lender may prepare and file such UCC financing statements or similar instruments as may be necessary to perfect the Lender’s security interest in any real or personal property pledged by the Borrower as security for the Loan. Section 7.15 Waiver of Jury Trial. BORROWER WAIVES ANY RIGHT TO TRIAL BY JURY UNDER ANY ACTION OR PROCEEDING ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT, THE NOTE, OR ANY OTHER DOCUMENT RELATED TO THE LOAN. Section 7.16 Governing Law and Construction. The validity, construction and enforceability of this Agreement shall be governed by the internal laws of the state, without giving effect to conflict of laws or principles thereof, but giving effect to federal laws of the United States applicable to national banks. Whenever possible, each provision of this Agreement and any other statement, instrument or transaction contemplated hereby or relating hereto, shall be interpreted in such manner as to be effective and valid under such applicable law, but, if any provision of this Agreement or any other statement, instrument or transaction contemplated hereby or relating hereto shall be held to be prohibited or invalid under such applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement or any other statement, instrument or transaction contemplated hereby or relating hereto. Section 7.17 Consent to Jurisdiction and Venue. At the option of Lender, this Agreement and the Note may be enforced in any federal court or state court sitting in Washington County, Minnesota; and Borrower consents to the jurisdiction and venue of any such court and waives any argument that venue in such forums is not convenient. If Borrower commences any action in another jurisdiction or venue under any tort or contract theory arising directly or indirectly from the relationship created by this Agreement, Lender at its option shall be entitled to have the case transferred to one of the jurisdictions and venues above described, or if such transfer cannot be accomplished under applicable law, to have such case dismissed without prejudice. 172981943v5 29 Section 7.18 USA Patriot Act. Federal law requires all financial institutions to obtain, verify and record certain information to verify the identity of each person or entity that opens an account, including deposit accounts, treasury management accounts, loan accounts or other extensions of credit, or other financial services. Lender will ask Borrower for Borrower’s name, address, taxpayer identification number and such other information as will allow Lender to identify Borrower. Lender will also ask an individual with significant responsibility for managing Borrower, for the same or similar information pertaining to such individual. Lender will verify and record the information and will retain and maintain the record as required by the USA Patriot Act and implementing regulations. Borrower warrants and represents that the information it provides to Lender for these purposes is and will be correct and accurate. Section 7.19 Non-Responsibility. Neither the City nor the Lender assumes liability for the sufficiency of Note proceeds to finance the Project. [Remainder of page intentionally left blank.] 172981943v5 S-1 IN WITNESS WHEREOF, the City and the Borrower have caused this Agreement to be executed in their respective names all as of the date first above written. City of Hugo, Minnesota By ____________________________________ Mayor By ____________________________________ City Administrator Loan Agreement between the City of Hugo, Minnesota and Legacy Christian Academy 172981943v5 S-2 Legacy Christian Academy By ____________________________________ Its_____________________________________ Loan Agreement between the City of Hugo, Minnesota and Legacy Christian Academy 172982028v5 Taft Draft June 27, 2025 UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF WASHINGTON CITY OF HUGO, MINNESOTA Educational Facilities Revenue Note, Series 2025 (Legacy Christian Academy Project) Date of Note: September [__], 2025 $5,500,000.00 FOR VALUE RECEIVED the City of Hugo, Minnesota, Washington County, Minnesota (the “City”) hereby promises to pay to the order of Falcon National Bank, a national banking association, its successors or registered assigns (the “Lender”), from the source and in the manner hereinafter provided, the principal sum of FIVE MILLION FIVE HUNDRED THOUSAND DOLLARS ($5,500,000.00), or so much thereof as has been advanced and remains unpaid from time to time (the “Principal Balance”), with interest thereon from the date hereof until paid or otherwise discharged as set forth in Paragraph 1 below, in any coin or currency which at the time or times of payment is legal tender for the payment of public or private debts in the United States of America, in accordance with the terms hereinafter set forth. 1. Interest Rate. (a) During the period beginning on the date of this Note until September [__], 2030 the (“Initial Rate Reset Date”), the initial fixed rate of interest payable hereunder shall be equal to 4.39 percent per annum (the “Initial Rate”). On the Initial Rate Reset Date and on each five year anniversary thereafter (each, a “Rate Reset Date”) through [_____] [___], 2045 (the “Final Maturity Date”), the interest rate on this Note will be adjusted to a rate per annum equal to seventy percent (70%) of the number which is the sum of the Index in effect on the Business Day immediately preceding such Rate Reset Date plus 250 basis points (the “Adjusted Rate”). The “Index” means an independent index which is the yield on the five year United States Treasury Securities. “Business Day” means any day that the Lender is open for business and excludes all Saturdays, Sundays and federally designated bank holidays. In no event will the Adjusted Rate be less than 4.0% or greater than 6.5%. (b) The interest rates referred to in this Note are not necessarily the lowest rates charged by the Lender on its loans. If the Lender determines, in its sole discretion, that, as of a Rate Reset Date, the Index has become unavailable or unreliable, either temporarily, indefinitely, or permanently, the Lender may amend this Note by designating a substantially similar substitute index. The Lender may also amend and add a positive or negative margin (percentage added to or subtracted from the substitute index value) as part of the rate determination on a Rate Reset Date. In making these amendments, the Lender may take into consideration any then-prevailing market convention for selecting a substitute index and margin for the specific Index that is unavailable or unreliable. Such an amendment to the terms of this Note will become effective and bind the Borrower (defined below) on a Rate Reset Date, provided the Lender has given at least 10 Business Days written notice to the Borrower without any action or consent of the Borrower. NOTICE: Under no circumstances will the interest rate on this Note be more than the maximum rate allowed by applicable law. On a Rate Reset Date, the Lender, at its option, may do one or more of the 172982028v5 2 following: (i) increase the Borrower’s payments to ensure this Note will pay off by its original final maturity date, (ii) increase the Borrower’s payments to cover accruing interest, (iii) increase the number of the Borrower’s payments, or (iv) continue the Borrower’s payments at the same amount and increase Borrower’s final payment. The Lender will tell the Borrower the current Index rate upon the Borrower’s request. The interest rate change will not occur more often than on each Rate Reset Date. Adjustments shall become effective the next Business Day after publication or announcement of the index change. The Borrower understands that the Lender may make loans based upon other rates and indices as well. 2. Repayment. Principal and interest on this Note shall be payable on the [___] day of each month in arrears commencing [____] [__], 2025 and continuing thereafter until the Final Maturity Date and in such amounts as are required to amortize the Principal Balance in accordance with the Amortization Schedule below, together with accrued interest thereon at the interest rate then in effect hereunder (such schedule subject to replacement following each Rate Reset Date to reflect the then current payment schedule and amortization). Amortization Schedule Number of Payments Number of Months Over Which Amortization Occurs Payments Dates Type of Payment Interest Rate 240 monthly payments 360 month amortization [___] [__], 2025 through September [__], 2045 Principal & Interest 4.39% through September [_ ], 2030, and thereafter at the Adjusted Rate then in effect A final installment of the then outstanding Principal Balance hereunder shall be due and payable on the Final Maturity Date, together with all then accrued and unpaid interest hereunder (adjusted by any default rate, service charge, late payment fees, or additional advances then due). 3. General Terms. In any event, the payments hereunder shall be sufficient to pay all principal and interest due, as such principal and interest becomes due, and to pay any premium or service charge, at maturity, upon prepayment, or otherwise. Interest shall be computed on [an actual/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding Principal Balance, multiplied by the actual number of days the Principal Balance is outstanding]. All interest payable under this Note is computed using this method. Unless required by applicable law, and prior to any default being declared, payments will be applied first to any accrued unpaid interest; then to any late charges, then to any unpaid collection costs, then to principal, and then to any escrow. If a payment date falls on a Saturday, Sunday, or federally designated bank holiday, the obligation will continue to incur interest until the payment is applied, and the payment will be applied (first to interest) on the next Business Day. For the purposes of this Note, principal and interest and premium, if any, due hereunder shall be payable at the principal office of the Lender, or at such other place as the Lender may designate in writing. 4. Purpose of Note. This Note is issued by the City to provide funds pursuant to a Loan Agreement dated as of the date hereof (the “Loan Agreement”) by and between the City and Legacy Christian Academy, a Minnesota nonprofit corporation (the “Borrower”), for a project consisting of (i) financing, in part, the acquisition of land and improvements located generally at 172982028v5 3 3037 Bunker Lake Blvd NW in the City of Andover, Minnesota for the purpose of the expansion and continued operation of an approximately 145,000 square foot pre-K–12 private school facility [including classrooms, administrative offices, and other spaces]; and (ii) paying all or a portion of the costs of issuance (collectively, the “Project”). This Note is further issued pursuant to and in full compliance with the Constitution and laws of the State of Minnesota, particularly Minnesota Statutes, Sections 469.152 to 469.165, and pursuant to a resolution of the City Council of the City duly adopted on July 7, 2025 (the “Resolution”). 5. Security for Note. This Note is secured by a Pledge Agreement dated as of the date hereof between the City and the Lender (the “Pledge Agreement”) and is further secured by a Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Financing Statement, dated as of the date hereof between the Borrower, as mortgagor, and the Lender, as mortgagee (the “Mortgage”), and certain other assignments, security agreements, guaranties, financing statements, and other instruments evidencing or securing the loan as may be required by the Lender. 6. City Waivers; Limitation on Extension of Final Maturity Date. The City, for itself, its successors and assigns, hereby waives demand, presentment, protest and notice of dishonor; and to the extent permitted by law, the Lender may extend interest and/or principal of or any service charge or premium due on this Note, including the Final Maturity Date, or release any part or parts of the property and interest subject to the Mortgage or to any other security document from the same, all without notice to or consent of any party liable hereon or thereon and without releasing any such party from such liability and whether or not as a result thereof the interest on this Note is no longer exempt from the federal or state income tax. In no event, however, may the Final Maturity Date of this Note be extended beyond 30 years from the date hereof. 7. Prepayment. This Note is subject to prepayment in immediately available funds on any date at the option of the Borrower, in whole or in part by paying principal, interest and premium, if any, then due, as provided in Section 5.1 of the Loan Agreement and this Note. To exercise this option, the Borrower must give written notice in the name of the City to the Lender or its successor in ownership of this Note (a “Holder”) not less than 30 days prior to the date fixed for prepayment; provided that the Holder may waive or provide alternative notice requirements. The prepayment price is equal to the outstanding principal amount of this Note to be prepaid plus accrued interest plus a premium, if any, as provided in Section 5.1 of the Loan Agreement. At the date fixed for prepayment, funds must be paid to the Holder at its registered address. In the event of any partial prepayment of this Note, the Lender shall apply any such prepayment against the accrued interest on the Principal Balance and then against the outstanding principal amount of this Note. Except as provided in the preceding paragraph, the monthly payments due under Paragraph 3 hereof, shall continue to be due and payable in full until the entire Principal Balance, accrued interest and any premium due on this Note have been paid. 8. Determination of Taxability; Taxable Rate. Upon a Determination of Taxability, as defined in the Loan Agreement, this Note shall convert to a taxable obligation and the interest rate for interest accruing from the Date of Taxability, as defined in the Loan Agreement, shall be adjusted to an interest rate per annum equal to the then current Taxable Rate. “Taxable Rate” is defined as follows: the rate then in effect divided by .70. Any interest accruing from the Date of Taxability which is retroactively due as a result of the interest rate adjustment shall be payable on 172982028v5 4 the first day of the following month along with regularly scheduled principal payment and interest accruing from the previous payment date at the Taxable Rate. If applicable, the interest rate shall thereafter be adjusted on each Rate Reset Date to the Taxable Rate in effect on such date. All such adjustments to the interest rate shall be made and become effective as of such Rate Reset Date and the interest rate as adjusted shall remain in effect through and including the day immediately preceding the Final Maturity Date. 9. Note Transfer. As provided in the Resolution and subject to certain limitations set forth therein, this Note is only transferable upon the books of the City at the office of the City Administrator, by the Lender in person or by its agent duly authorized in writing, at the Lender’s expense, upon surrender hereof together with a written instrument of transfer satisfactory to the City Administrator, duly executed by the Lender or its duly authorized agent. Upon such transfer the City Administrator will note the date of registration and the name and address of the new registered owner in the registration blank appearing below. The City may deem and treat the person in whose name this Note is last registered upon the books of the City with such registration noted on this Note, as the absolute owner hereof, whether or not overdue, for the purpose of receiving payment of or on the account of the Principal Balance, redemption price or interest and for all other purposes, and all such payments so made to the Lender or upon such person’s order shall be valid and effective to satisfy and discharge the liability upon this Note to the extent of the sum or sums so paid, and the City shall not be affected by any notice to the contrary. 10. Incorporation of Other Documents. All of the agreements, conditions, covenants, provisions and stipulations contained in the Resolution, the Mortgage, the Loan Agreement, and the Pledge Agreement are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. 11. Limitation of City’s Liability. This Note and interest thereon and any service charge or premium, if any, due hereunder are payable solely from the revenues and proceeds derived from the Loan Agreement, the Mortgage and any other documents securing this Note and do not constitute a debt of the City within the meaning of any constitutional or statutory limitation, are not payable from or a charge upon any funds other than the revenues and proceeds pledged to the payment thereof, and do not give rise to a pecuniary liability of the City or any of its officers, agents or employees, and no holder of this Note shall ever have the right to compel any exercise of the taxing power of the City to pay this Note or the interest thereon, or to enforce payment thereof against any property of the City, and this Note does not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City, and the agreement of the City to perform or cause the performance of the covenants and other provisions herein referred to shall be subject at all times to the availability of revenues or other funds furnished for such purpose in accordance with the Loan Agreement, sufficient to pay all costs of such performance or the enforcement thereof. 12. Late Payment Fee[; Default Rate Margin]. Any monthly payment of principal or interest not made within ten (10) days after the due date shall be subject to a late payment fee equal to five percent (5%) of the unpaid portion of the regularly scheduled payment, but in any event not to exceed the amount permitted by applicable law. Late payment fees shall apply individually to all payments past due. This provision shall not be deemed to excuse a late payment or be deemed a waiver of any other rights the Lender may have[, including the right to declare the entire unpaid 172982028v5 5 principal and interest immediately due and payable]. Lender shall charge a dishonored item fee (currently Thirty Five Dollars ($35.00), subject to change from time to time) upon the dishonor of any check or preauthorized charge with which payments of principal or interest on this Note are made. Upon the occurrence and continuation of an Event of Default (as that term is defined in the Mortgage and the Loan Agreement), including failure to pay upon final maturity, and irrespective of whether the Lender exercises its option to accelerate the maturity of this Note by reason of such Event of Default, Lender, at its option may, as permitted under applicable law, add any unpaid accrued interest to the Principal Balance of this Note. [If an Event of Default shall occur, and during the continuance of such Event of Default, including failure to pay upon final maturity, the Lender, at its option, may, as permitted under applicable law, increase the interest rate on this Note to [____] percent ([__]%) (the “Default Rate Margin”) above the then applicable interest rate on this Note. The Default Rate Margin may also apply, at the Lender’s option, to each succeeding interest rate change that would have applied had there been no default. This increased rate shall never exceed the maximum rate permitted by applicable law.] 13. Event of Default. If an Event of Default shall occur,[ and during the continuance of such Event of Default,] then the Lender shall have the right and option, among other things, to declare the Principal Balance and accrued interest thereon immediately due and payable, whereupon the same, plus any premiums or service charges, shall be due and payable, but solely from sums made available under the Loan Agreement, the Mortgage, and any other documents securing this Note. Failure to exercise such option at any time shall not constitute a waiver of the right to exercise the same at any subsequent time. 14. Remedies. The remedies of the Lender, as provided herein and in the Mortgage, the Loan Agreement, and the Pledge Agreement, are not exclusive and shall be cumulative and concurrent and may be pursued singly, successively or together, at the sole discretion of the Lender, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof. 15. Lender Waiver. The Lender shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Lender and then only to the extent specifically set forth in the writing. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. 16. No Registration Under Securities Laws. This Note has been issued without registration under state or federal or other securities laws, pursuant to an exemption for such issuance; and accordingly this Note may not be assigned or transferred in whole or part, nor may a participation interest in this Note be given pursuant to any participation agreement, except to another “accredited investor” or “financial institution” in accordance with an applicable exemption from such registration requirements and with full and accurate disclosure of all material facts to the prospective purchaser(s) or transferee(s). 172982028v5 6 17. Qualified Tax-Exempt Obligation. The City has designated this Note as a “qualified tax-exempt obligation” under Section 265(b) of the Internal Revenue Code of 1986, as amended. [Remainder of page left blank intentionally. Signature page immediately follows.] 172982028v5 Taft Draft June 27, 2025 S-1 IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts and things required to exist to happen and to be performed precedent to or in the issuance of this Note do exist, have happened and have been performed in regular and due form as required by law. IN WITNESS WHEREOF, the City has caused this Note to be duly executed in its name by the manual signatures of the Mayor and City Administrator, the seal of the City having been intentionally omitted as permitted by law, and has caused this Note to be dated as of the date first written above. CITY OF HUGO, MINNESOTA By ____________________________________ Its Mayor And By ________________________________ Its City Administrator 172982028v5 Taft Draft June 27, 2025 PROVISIONS AS TO REGISTRATION The ownership of the unpaid Principal Balance of this Note and the interest accruing thereon is registered on the books of the City of Hugo, Minnesota in the name of the holder last noted below. Date of Registration Name and Address Registered Owner Signature of City Administrator , 2025 Falcon National Bank 905 6th Avenue Court NE Isanti, Minnesota 55040 GDO Draft June 6, 2025 MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT (the "Mortgage"), made this ____ day of _____________, 2025, by Legacy Christian Academy, a Minnesota nonprofit corporation, with an address at 3037 Bunker Lake Boulevard, Andover, Minnesota 55304 ("Mortgagor") in favor of Falcon National Bank, a national banking association, with an address at 1010 W. St. Germain Street, Ste. 150, St. Cloud, Minnesota 56301 ("Mortgagee"). WITNESSETH: To secure the payment by the Mortgagor of the principal of and interest accruing at a variable rate on a loan in the total amount of $5,500,000.00 made in accordance with the terms and conditions of a Loan Agreement, dated __________ 1, 2025 (the “Loan Agreement”), between the City of Hugo, Minnesota (the “Issuer”), and the Mortgagor. The loan was made from the proceeds derived from the sale by the Issuer of its City of Hugo, Minnesota Educational Facilities Revenue Note (Legacy Christian Academy Project) Series 2025 (the “Note”), issued in the original principal amount of $5,500,000.00. The payments to be made by the Mortgagor under the terms of the Loan Agreement have been assigned to the Mortgagee and will be applied by the Mortgagee to the payment of the principal, interest, and other charges due on the Note; together with interest thereon at a variable rate as provided in the Note, on or before July ___, 2045, and to also secure the payment of debts, obligations and liabilities of Mortgagor, heretofore, now or hereafter made, incurred or created, whether voluntary or involuntary and however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, including under any swap, derivative, foreign exchange, hedge, deposit, treasury management or other similar transaction or arrangement, and whether Mortgagor may be liable individually or jointly with others. To the extent that this Mortgage secures future advances or obligations, the amount of such advances or obligations is not currently known. By accepting this 2 Mortgage, the Mortgagee acknowledges that it is aware of the provisions of Minnesota Statutes Section 287.05, subd. 5 and intends to comply with the requirements contained therein. The acknowledgments contained in this paragraph are made solely for the benefit of county recording authorities in determining the mortgage registry tax (if any) payable as a prerequisite to the recording of this Mortgage. The Mortgagor acknowledges that such acknowledgements do not constitute or imply an agreement by the Mortgagee to make any future advances to the Mortgagor. Mortgage. Mortgagor hereby mortgages to Mortgagee the tract of land legally described on Exhibit A attached hereto, lying in the County of Anoka, State of Minnesota, together with all tenements, easements, hereditaments, privileges, minerals and mineral rights, water and water rights, buildings, fixtures and improvements now or hereafter erected or located on the above described land (the "mortgaged premises"). Assignment of Leases and Rents. Mortgagor hereby assigns to Mortgagee all leases now or hereafter affecting the mortgaged premises and all rents and profits due or to become due with respect to the mortgaged premises, whether before or after foreclosure or during any redemption period after foreclosure sale, as additional security for the repayment of the Note, and Mortgagor hereby further agrees that Mortgagee shall upon the occurrence of an Event of Default hereunder have the power pursuant to this Assignment of Leases and Rents irrevocably to manage, control and lease the mortgaged premises. Upon the occurrence of an Event of Default hereunder and without regard to waste, adequacy of the security, or solvency of the Mortgagor, Mortgagee may, at its option, either: (a) Apply to the Minnesota District Court for the County wherein the mortgaged premises hereunder is located for the appointment of a receiver under Minnesota Statutes Section 559.17, it being understood and agreed that Mortgagee shall be entitled to the appointment of a receiver upon a showing that an Event of Default has occurred under the terms of this Mortgage. A receiver so appointed shall apply all rents and profits collected from the date of his appointment through the redemption period from any foreclosure sale, first as provided in Minnesota Statutes Section 576.25, and thereafter shall apply the rents and profits to the payment of the following items in the order indicated: first, to the payment of principal and interest on any prior mortgages; second, to the payment of any other prior liens or encumbrances; and third, to the payment of principal and interest on the Note; or (b) Collect all rents and profits from the occupiers of the mortgaged premises upon the filing by the Mortgagee, in the office of the County Recorder or, in the case of registered property in the office of the Registrar of Titles, for the County in which the property is located, of a notice of the occurrence of an Event of Default in the terms and conditions of this Mortgage and the service of said notice of default upon the occupiers of the mortgaged premises. From the date of filing and service upon the occupiers of notice of default through the redemption period from any foreclosure sale, Mortgagee shall apply all rents and profits so 3 collected in the same manner as is provided in Subparagraph (a) above where the rents and profits are collected pursuant to the appointment of a receiver. In the event Mortgagee exercises its rights under this subparagraph (b), it shall not, solely by reason thereof, be deemed to be a mortgagee-in- possession of the mortgaged premises. Security Agreement. Mortgagor hereby grants to Mortgagee a security interest in: (a) all building materials, equipment, fixtures (including, but not limited to, all engines, boilers, elevators, machinery, heating apparatus, electrical equipment, air conditioning equipment, water and gas fixtures, plumbing, communication devices, carpeting, shades, awnings, screens, storm sashes and blinds) now or hereafter located or intended to be located on the mortgaged premises of whatsoever type or nature whether now owned or hereafter acquired by Mortgagor, including all replacements, repairs and substitutions thereto (collectively, “Equipment and Fixtures”). (b) all rights of Mortgagor with respect to tenants or occupants of all or part of the mortgaged premises, including, without limitation, all leases, licenses and rights in connection therewith, whether oral or written (collectively, “Leases”), and all rents, revenue, income and accounts both from services and occupants, royalties, revenues (collectively, “Rents”) which are now or hereafter due to be paid in connection with the mortgaged premises, the improvements thereto, the Equipment and Fixtures, the Leases and the Rents. (c) all general intangibles of Mortgagor which relate to the mortgaged premises, the improvements thereto, the Equipment and Fixtures, including, without limitation, trade names, accounts receivable, contract rights and banking and depository accounts. (d) all after acquired property similar to the property herein described and conveyed which may be subsequently acquired by Mortgagor and used in connection with the mortgaged premises, the improvements thereto, the Equipment and Fixtures and all other property and all cash and non-cash proceeds and products of all of the foregoing described property. Mortgagor hereby covenants and agrees that upon the occurrence of an Event of Default hereunder, Mortgagee may, in addition to any other remedy provided for herein or which it may have at law or equity, exercise all rights granted to it under the Minnesota Uniform Commercial Code, Minnesota Statutes Chapter 336. Fixture Financing Statement. The filing of this Mortgage shall constitute the filing of a Fixture Filing within the meaning of the Minnesota Uniform Commercial Code, and for such purpose, the following information is given: 4 (a) Name and Address of Debtor: Legacy Christian Academy 3037 Bunker Lake Boulevard Andover, MN 55304 (b) Name and Address of Secured Party: Falcon National Bank 1010 W. St. Germain Street, Ste. 150 St. Cloud, MN 56301 (c) Description of the types of property covered by this Fixture Filing is described herein (d) The real estate to which such fixtures are or are to be attached is described on Exhibit A attached hereto, the record owner of which is Debtor. 1. Statutory Covenants. Mortgagor makes and includes in this Mortgage the Statutory Covenants and other provisions set forth in Minnesota Statutes Section 507.15 and the Mortgagor covenants with the Mortgagee the following Statutory Covenants: (a) To warrant the title to the mortgaged premises, subject only to the encumbrances listed on Exhibit B attached hereto ("Permitted Encumbrances"). (b) To pay the indebtedness as herein provided, provided that only those obligated to repay the Note, whether as makers, guarantors, or otherwise shall be obligated under this covenant. (c) To pay all taxes. (d) To keep all buildings insured against fire for an amount not less than the full replacement cost but in any event not less than the unpaid amount of the Note and by all prior mortgages (if any) and against other hazards for the amounts specified by Mortgagee for the protection of the Mortgagee, including, but not limited to, lightning, hazards under the usual extended coverage endorsement, and all other hazards and risks of direct physical loss occasioned by any cause whatsoever, subject only to the exceptions and exclusions, if any, agreed to by Mortgagee. All such policies shall name Mortgagee as loss payee under the so- called standard mortgage clause, contain no pro rata reduction provisions and provide for not less than thirty (30) days notice to Mortgagee of the cancellation of said policy. Mortgagor shall provide to Mortgagee not less often than annually, a current certificate of insurance reflecting the insurance coverages required hereby. (e) That the mortgaged premises shall be kept in repair and no waste shall be committed. 5 (f) That the whole of the principal sum shall become due after default, in the payment of any installment of principal or interest, or of any tax, or in the performance of any other covenant, at the option of the Mortgagee. 2. Additional Covenants and Agreement of Mortgagor. The Mortgagor makes the following additional covenants and agreements with the Mortgagee: (a) Any award of damages under condemnation or payment in lieu thereof for injury to or the taking of all or any part of the mortgaged premises are hereby assigned to the Mortgagee with authority to apply the proceeds to the amounts outstanding on the Note. All such proceeds shall be applied first to accrued interest, if any, and then to the principal amount outstanding on the Note, and if the principal amount is payable in installments, said proceeds, after payment of accrued interest, shall be applied to said installments in the inverse order of their maturity. (b) Any proceeds of any insurance payable by reason of loss or damage to the mortgaged premises are hereby assigned and shall be paid to the Mortgagee with authority to apply the proceeds to the amounts outstanding on the Note. All such proceeds shall be applied first to interest, if any, and then to the principal amount outstanding, and if the principal amount is payable in installments, said proceeds after payment of accrued interest, shall be applied to said installments in the inverse order of maturity. Provided no Event of Default has occurred and is continuing hereunder and no event has occurred which with notice or passage of time or both would mature into such an Event of Default, Mortgagor may elect to make repairs on the mortgaged premises. The insurance proceeds necessary to undertake any repair work shall be deposited in escrow with a title insurance company qualified to do business in Minnesota, or with any other party mutually agreeable to the parties. Mortgagor shall also deposit into such escrow amounts in excess of such insurance proceeds as may be necessary to complete the repairs. Even if the insurance proceeds are unavailable or are insufficient to pay the cost of the repair work, Mortgagor shall at all times be responsible to pay the full cost of the repair work. All escrowed funds shall be disbursed by the escrowee in accordance with generally accepted sound construction disbursement procedures. The election by the Mortgagor may be made only by written notice to the Mortgagee and all plans, specifications, and contracts for the repair work must be approved in writing by the Mortgagee. The costs incurred, or to be incurred on account of such escrow shall be deposited by Mortgagor into such escrow before the commencement of the repair work. Mortgagor shall substantially complete such repair work so as to permit substantial resumption of business as soon as reasonably possible but in no event longer than 180 days from the date of loss or damage (such period to be extended in the event of natural disasters or other acts of God outside the control of Mortgagor that cause delays in completing such repair work) and in a good and workmanlike manner. 6 (c) Mortgagor will hold Mortgagee harmless from all costs and expenses in connection with establishing the priority of this Mortgage and if the Mortgagee becomes a party to any mechanic's lien suit or other proceeding relating to the mortgaged premises or to this Mortgage, the Mortgagor will reimburse the Mortgagee for the Mortgagee's reasonable attorneys' fees, costs and expenses in connection with said suit or proceeding. (d) Mortgagor will not sell, lease, convey, mortgage, pledge, grant a security interest in, or otherwise transfer or encumber all or any part of the mortgaged premises or any interest therein without the prior written consent of the Mortgagee. (e) Mortgagor will pay the principal and interest, when due, on prior mortgages and other similar encumbrances. (f) Mortgagor will hold and apply tenants' security deposits, if any, as required by Minnesota Statutes, Chapter 504B. (g) Mortgagor will keep and perform the covenants of lessor under any leases covering the mortgaged premises and the covenants of a lessor and a licensor pursuant to Minnesota Statutes, Chapter 504B. (h) Subject only to the Permitted Encumbrances, Mortgagor has good title to all fixtures and equipment mortgaged hereby, and no other financing statements or mortgage governing said goods is on file in any office and Mortgagor has and will keep said goods adequately covered by extended coverage hazard insurance, such insurance to name Mortgagee as loss payee under the standard mortgage clause. (i) Mortgagor has made no assignment (except to Mortgagee) of any leases or rentals from the mortgaged premises. (j) Mortgagor will promptly pay when due all charges for utilities or other services to the mortgaged premises including, but not limited to, electricity, water, gas, telephone, sanitary sewer and trash and garbage removal supplied and upon request of Mortgagee provide evidence of such payment. (k) Upon Mortgagee's written request at any time after an Event of Default (as hereinafter defined), Mortgagor shall deposit with Mortgagee on the first day of each and every month hereafter, an amount equal to one-twelfth (1/12th) of the annual taxes, assessments and insurance premiums (the "Charges") due on or relating to the mortgaged premises as estimated by Mortgagee. From time to time out of such deposits and to the extent such deposits are sufficient Mortgagee will, upon presentation to Mortgagee by Mortgagor of bills thereof, pay the Charges or will upon presentation of receipted bills therefor, reimburse Mortgagor for such payments made by Mortgagor. In the event (a) the 7 deposits on hand are not sufficient to pay all of the Charges when the same become due from time to time, or (b) Mortgagee estimates that the current monthly deposits are less than the estimated monthly amounts necessary to pay the Charges as they become due and from time to time, then Mortgagor shall pay to Mortgagee on demand the amount necessary to make up the deficiency. The excess of any such deposits shall be credited to subsequent payments to be made for such items. If an Event of Default, as herein defined, shall occur under the terms of this Mortgage or the Note, Mortgagee may, at its option, without being required to do so, apply any deposits on hand to the indebtedness secured hereby in such order and manner as Mortgagee may elect. When the indebtedness secured hereby has been fully paid, any remaining deposits shall be returned to Mortgagor or other person entitled thereto. All deposits are hereby pledged as additional security for the indebtedness secured hereby and shall be held for the purposes provided for in this paragraph. Such deposits may be held by Mortgagee, or its agent, and shall be held without any allowance of interest thereon and shall not be subject to the decision or control of Mortgagor. The enforceability of the other covenants relating to taxes and assessments shall not be affected except insofar as those obligations have been met by compliance with this paragraph. Mortgagee may from time to time, at its option, waive, and after such waiver, reinstate any and all of the provisions contained in this paragraph. While such waiver is in effect, Mortgagor shall pay taxes and assessments and premiums for insurance as herein provided. 3. Rules, Regulations, Environmental Laws. The Mortgagor represents and warrants to the best of its knowledge and except as disclosed in written reports by third party engineers delivered to Mortgagee: (i) that the location, construction, occupancy, operation and use of the mortgaged premises do not violate any applicable law, statute, ordinance, rule, regulation, order or determination of any governmental authority or any board of fire underwriters (or other body exercising similar functions), or any restrictive covenant or deed restriction (recorded or otherwise) affecting the mortgaged premises, including without limitation, all applicable zoning ordinances and building codes, flood disaster laws and health and environmental laws and regulations (hereinafter sometimes collectively called "Applicable Regulations"); (ii) that the mortgaged premises and the Mortgagor are not in violation of or subject to any existing pending or threatened investigation or inquiry by any governmental authority or to any remedial obligations under any Applicable Regulations pertaining to health or the environment (hereinafter sometimes collectively called "Applicable Environmental Laws"), including without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"); the Superfund Amendments and Reauthorization Act of 1988 ("SARA"); the Resource Conservation and Recovery Act of 1976 ("RCRA"); Minnesota Environmental Response and Liability Act of 1987 ("MERLA"); and Minnesota Petroleum Tank Release Clean-up Act of 1988 ("MPTRCA") and this representation and warranty would continue to be true and correct following disclosure to the applicable governmental authorities of all relevant facts, conditions and circumstances, if any, pertaining to the mortgaged premises; (iii) that the Mortgagor has not obtained and is not required to obtain any permits, licenses or similar authorizations to construct, occupy, operate or use any 8 buildings, improvements, fixtures and equipment forming a part of the mortgaged premises by reason of any Applicable Environmental Laws; (iv) that the Mortgagor has taken all steps necessary to determine and has determined that no hazardous substances or solid wastes have been disposed of or otherwise released on or to the mortgaged premises; (v) that except as disclosed to Mortgagee the mortgaged premises do not contain asbestos in any form, ureaformaldehyde foam insulation, PCB's or any other chemical, material or substance exposure to which may or could pose a health hazard whether or not the substance is prohibited, limited or regulated by any governmental authority; (vi) that the use which the Mortgagor makes and intends to make of the mortgaged premises will not result in the disposal or other release of any hazardous substance or solid waste on or to the mortgaged premises; (vii) that there have not been and are currently no underground storage tanks located on mortgaged premises; and (viii) that there have not been and there are not any wells located on the mortgaged premises. The terms "hazardous substance" and "release" shall have the meanings specified in CERCLA and MERLA, and the terms "solid waste" and "disposal" (or "disposed") shall have the meanings specified in RCRA; provided, in the event either CERCLA, SARA, RCRA, MERLA or MPTRCA is amended so as to broaden the meaning of any term defined thereby, such broader meaning shall apply subsequent to the effective date of such amendment. 4. Protection of Security. To the extent Mortgagor fails to perform any of its covenants or obligations hereunder, Mortgagee shall have the right, but not the duty and without notice to Mortgagor, to expend such sums as may be deemed necessary or expedient in the exercise of its sole discretion to perform such obligations and all amounts so expended by Mortgagee pursuant to this provision shall be secured hereby, shall be payable on demand of Mortgagee and shall bear interest at the highest rate provided for in the Note. 5. Events of Default/Acceleration of Maturity. Mortgagor agrees that at the option of the Mortgagee and in addition to Mortgagee's right to accelerate the maturity of the indebtedness secured hereby as set forth above in the Statutory Covenants, the entire remaining principal balance plus accrued interest shall become due and payable in full upon the occurrence of any of the following (each of which is herein referred to as an "Event of Default"): (a) The default by Mortgagor in the performance of any other covenants or agreements contained herein or in the Note; or (b) The occurrence of an "Event of Default" under the terms of the Loan Agreement, as the same may be hereafter amended, extended or modified; or (c) The Mortgagor shall, without prior written consent of Mortgagee, sell, lease or transfer or agree to sell, lease or transfer all or any part of the mortgaged premises or interest therein; or, the legal, beneficial or equitable ownership of Mortgagor shall be changed by sale, lease, conveyance, transfer, assignment or encumbrance. 9 6. Statutory Power of Sale, Waiver and Agreement. At maturity, whether at the stated time or prior thereto by the acceleration of maturity pursuant hereto, Mortgagee (in addition to any other remedies provided for herein or which it may have at law or equity) shall have the statutory power of sale, and on foreclosure may retain statutory costs and attorneys' fees. MORTGAGOR HEREBY EXPRESSLY CONSENTS TO THE FORECLOSURE AND SALE OF THE MORTGAGED PREMISES BY ACTION PURSUANT TO MINNESOTA STATUTES CHAPTER 581 OR, AT THE OPTION OF MORTGAGEE, BY ADVERTISEMENT PURSUANT TO MINNESOTA STATUTES CHAPTER 580, WHICH PROVIDES FOR SALE AFTER SERVICE OF NOTICE THEREOF UPON THE OCCUPANT OF THE MORTGAGED PREMISES AND PUBLICATION OF SAID NOTICE FOR SIX WEEKS IN THE COUNTY IN MINNESOTA WHERE THE MORTGAGED PREMISES IS SITUATED; ACKNOWLEDGES THAT SERVICE NEED NOT BE MADE UPON MORTGAGOR PERSONALLY (UNLESS MORTGAGOR IS AN OCCUPANT) AND THAT NO HEARING OF ANY TYPE IS REQUIRED IN CONNECTION WITH THE SALE; AND EXCEPT AS MAY BE PROVIDED IN SAID STATUTES, EXPRESSLY WAIVES ANY AND ALL RIGHT TO PRIOR NOTICE OF SALE OF THE MORTGAGED PREMISES AND ANY AND ALL RIGHTS TO A PRIOR HEARING OF ANY TYPE IN CONNECTION WITH THE SALE OF THE MORTGAGED PREMISES. MORTGAGOR ALSO WAIVES AND RELINQUISHES ANY AND ALL RIGHTS WHICH MORTGAGOR MAY HAVE TO HAVE THE MORTGAGED PREMISES SOLD IN SEPARATE PARCELS AT ANY FORECLOSURE SALE. 7. Future Advances. (a) To the extent that this Mortgage secures future advances, the amount of such advances is not currently known. By accepting this Mortgage, the Mortgagee acknowledges that it is aware of the provisions of Minnesota Statutes Section 287.05, subd. 5 and intends to comply with the requirements contained therein. (b) The maximum principal amount of indebtedness secured by this Mortgage at any one time, excluding advances made by Mortgagee in protection of the mortgaged premises or the lien of this Mortgage, shall be $5,500,000.00. (c) The representations contained in this paragraph 7 are made solely for the benefit of county recording authorities in determining the mortgage registry tax (if any) payable as a prerequisite to the recording of this Mortgage. The Mortgagor acknowledges that such representations do not constitute or imply an agreement by the Mortgagee to make any future advances to the Mortgagor. 8. Miscellaneous. This Mortgage shall be governed by and construed in accordance with the laws of the State of Minnesota and shall inure to the benefit of Mortgagee, its successors and assigns. In the event any provision hereof is determined 10 to be unenforceable or invalid, such provision or such part thereof as may be unenforceable or invalid shall be deemed severed from this Mortgage and the remaining provisions carried out with the same force and effect as if the severed provisions or part thereof had not been made a part hereof. (the remainder of this page left blank) 11 (signature page to Mortgage) Legacy Christian Academy By:______________________________ Its:___________________________ STATE OF MINNESOTA ) )ss. COUNTY OF _________ ) The foregoing instrument was acknowledged before me this ____ day of _____________, 2025, by __________________, the _____________________ of Legacy Christian Academy, a Minnesota nonprofit corporation, on behalf of the corporation. __________________________________ Notary Public This instrument drafted by: GDO Law 4770 White Bear Parkway White Bear Lake, MN 55110 651.426.3249 12 EXHIBIT A LEGAL DESCRIPTION The land herein referred to is situated in the County of Anoka, State of Minnesota and is described as follows: Parcel 1: The South 433 feet of the East 400 feet of the Southwest Quarter of the Northwest Quarter (SW¼ of NW¼) of Section 33, Township 32, Range 24 in Anoka County, Minnesota, EXCEPT the South 60.00 feet of the following described property: The South 433 feet of the East 400 feet of the Southwest Quarter of the Northwest Quarter (SW¼ of NW¼) of Section 33, Township 32, Range 24 in Anoka County, Minnesota. Parcel 2: The South 1089.00 feet, as measured at right angles to the south line, of that part of the Southwest Quarter of the Northwest Quarter lying west of the East 777.28 feet as measured at right angles to the East line thereof. All in Section 33, Township 32, Range 24, Anoka County, Minnesota. Except the South 360.00 feet of the West 240.00 feet as measured at right angles to the south and west lines thereof. ALSO EXCEPTING The south 60.00 feet of the following described property: The South 1089.00 feet, as measured at right angles to the south line, of that part of the Southwest Quarter of the Northwest Quarter lying west of the East 777.28 feet as measured at right angles to the East line thereof. All in Section 33, Township 32, Range 24, Anoka County, Minnesota. Except the South 360.00 feet of the West 240.00 feet as measured at right angles to the south and west lines thereof. Parcel 3: That part of the Northwest Quarter of Section 33, Township 32, Range 24, Anoka County, Minnesota, described as follows: The East 777.28 feet of the South 2,043.41 feet of the West Half of said Northwest Quarter, except therefrom the East 400 feet of the South 433 feet; subject to County State Aid Highway No. 16 over the South 33 feet. EXCEPT The North 954.41 feet of the South 2043.41 feet of the East 777.28 feet of the West Half of the Northwest Quarter of Section 33, Township 32, Range 24, Anoka County, Minnesota as measured at right angles to the south and east lines thereof. ALSO EXCEPTING The South 60.00 feet of the following described property: The East 777.28 feet of the south 1089.00 feet of the Southwest Quarter of the Northwest Quarter of Section 33, Township 32, Range 24, Anoka County, Minnesota EXCEPT therefrom the east 400.00 feet of the south 433.00 feet thereof, as measured along the east and south lines thereof. 13 Parcel 4: The South 360 feet of the West 240 feet of the Southwest Quarter of the Northwest Quarter of Section 33, Township 32, Range 24, Except part taken for road in Final Certificate filed as Document Number 1902149, Anoka County, Minnesota. 14 EXHIBIT B PERMITTED ENCUMBRANCES 1. Real estate taxes and special assessments not yet due and payable. 2. Rights of tenants in possession and the terms and conditions of any rental or lease agreement thereof. 3. A permanent easement for storm water ponding purposes as shown in document filed December 11, 1978, as Document No. 0514791. 4. A permanent easement for utility construction purposes as shown in document filed April 11, 1986, as Document No. 0706413. 5. A utility and trail easement as shown in document filed March 4, 2004, as Document No. 1902149. 6. An easement for the operation and maintenance of stormwater facilities as shown in document filed December 3, 2019, as Document No. 2244321. (Pertains to Parcel 3). 172981796v3 Taft Draft June 24, 2025 PLEDGE AGREEMENT This Pledge Agreement is made as of September [__], 2025 between the City of Hugo, Minnesota, a municipal corporation and political subdivision of the State of Minnesota (the “City”), and Falcon National Bank, a national banking association (the “Lender”). Recitals WHEREAS, Legacy Christian Academy, a Minnesota nonprofit corporation (the “Borrower”), and the City have entered into a Loan Agreement (the “Loan Agreement”) of even date herewith, pursuant to which the City will lend to the Borrower the proceeds of the $5,500,000.00 Educational Facilities Revenue Note, Series 2025 (Legacy Christian Academy Project) (the “Note”); and WHEREAS, the Note is to be payable from and secured by the loan repayments to be made by the Borrower under the Loan Agreement; and the Lender, as a condition to the purchase of the Note, has required the execution of this Pledge Agreement. NOW THEREFORE, as an inducement to the Lender to purchase the Note, and in consideration of the promises and other good and valuable consideration, the receipt and sufficiency whereof is hereby acknowledged, the parties hereby agree as follows: 1. In order to secure the due and punctual payment of the Note and all other sums due the Lender under the Loan Agreement, the City does hereby pledge and assign to the Lender all of the City’s right, title and interest in and to the Loan Agreement, subject to the City’s rights under the provisions of Section 7.9 thereof. 2. The City hereby represents and warrants to the Lender that the City’s right, title and interest in the Loan Agreement is free and clear of any lien, security interest or other encumbrance other than that arising under this Pledge Agreement. 3. The City hereby authorizes the Lender to exercise, whether or not a default exists under the Note or an Event of Default has occurred under the Loan Agreement, either in the City’s name or the Lender’s name, any and all rights or remedies available to the City under the Loan Agreement. The City agrees, on request of the Lender, to execute and deliver to the Lender such other documents or instruments as shall be deemed necessary or appropriate by the Lender at any time to confirm or perfect the security interest hereby granted. The City hereby appoints the Lender its attorney-in-fact to execute on behalf of the City, and in its name, any and all such assignments, financing statements or other documents or instruments which the Lender may deem necessary or appropriate to perfect, protect or enforce the security interest hereby granted. 4. The City will not: (a) exercise or attempt to exercise any remedies under the Loan Agreement, except as permitted by Sections 6.2 and 7.9 of the Loan Agreement, or terminate, modify or accept a surrender of the same, or by affirmative act, consent to the creation or existence of any security interest or other lien in the Loan Agreement to secure payment of any other indebtedness; or 172981796v3 2 (b) receive or collect or permit the receipt or collection of any payments, receipts, rentals, profits or other moneys under the Loan Agreement (except as allowed under Section 7.9 thereof) or assign, transfer or hypothecate (other than to the Lender hereunder) any of the same then due or to accrue in the future. 5. The City expressly covenants and agrees that the Lender shall be entitled to receive all payments under the Loan Agreement (except any payments due the City under Section 7.9 thereof), and hereby authorizes and directs the Borrower to make such payments directly to the Lender. The Lender covenants and agrees that all payments received by the Lender pursuant to the Loan Agreement shall be applied as provided in the Loan Agreement. 6. The Lender agrees to advance the purchase price of the Note directly to the Borrower as provided in the Note and the Loan Agreement. In accordance with Section 7.9 of the Loan Agreement the Lender hereby assumes the City’s and Lender’s obligations to the Borrower thereunder except for the City’s obligations in connection with its representations in Section 2.1 of the Loan Agreement which are not being assumed. 7. If an Event of Default (as defined in the Loan Agreement) shall occur and be continuing, the Lender may exercise any one or more or all, and in any order, of the remedies hereinafter set forth, in addition to any other remedy at law or in equity or specified in the Loan Agreement, it being expressly understood that no remedy herein conferred is intended to be exclusive of any other remedy or remedies; but each and every remedy shall be cumulative and shall be in addition to every other remedy given herein or now or hereafter existing at law or in equity or by statute: (a) The Lender may, without prior notice of any kind declare the principal of and interest accrued and any premium (as described in the Loan Agreement) on the Note immediately due and payable. (b) The Lender may exercise any rights and remedies and options of a secured party under the Uniform Commercial Code as adopted in the State of Minnesota and any and all rights available to it under the Loan Agreement and Mortgage (as defined in the Loan Agreement) securing payment of the Note. 8. Whenever any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all the covenants, promises and agreements in this Pledge Agreement contained by or on behalf of the City or the Lender shall bind and inure to the benefit of the respective successors and assigns of such parties whether so expressed or not. 9. The unenforceability or invalidity of any provision or provisions of this Pledge Agreement shall not render any other provision or provisions herein contained unenforceable or invalid. 10. This Pledge Agreement shall in all respects be construed in accordance with and governed by the laws of the State of Minnesota. This Pledge Agreement may not be amended or modified except in writing signed by the City and the Lender. 172981796v3 3 11. This Pledge Agreement may be executed, acknowledged and delivered in any number of counterparts and each of such counterparts shall constitute an original but all of which together shall constitute one agreement. 12. The terms used in this Pledge Agreement which are defined in the Loan Agreement shall have the meanings specified therein, unless the context of this Pledge Agreement otherwise requires, or unless such terms are otherwise defined herein. 13. No obligation of the City hereunder shall constitute or give rise to a pecuniary liability of the City or a charge against its general credit or taxing powers, but shall be payable solely out of the proceeds and the revenues derived under the Loan Agreement. [Remainder of page left blank intentionally. Two signature pages immediately follow.] 172981796v3 S-1 IN WITNESS WHEREOF, the City and the Lender have caused this Pledge Agreement to be duly executed as of the day and year first above written. CITY OF HUGO, MINNESOTA By______________________________ Its Mayor By______________________________ Its City Administrator Signature page to Pledge Agreement 172981796v3 S-2 FALCON NATIONAL BANK By______________________________ [______________] Its [____________] Signature page to Pledge Agreement July 2, 2025 Honorable Mayor and City Council City of Hugo 14669 Fitzgerald Avenue North Hugo, MN 55038 Re: TH 61 Between Egg Lake Road and Frenchman Road Improvements - Update and Request for Extension of Working Hours Dear Mayor and Council, As you are aware, Washington County, in partnership with the City of Hugo and MNDOT, are making improvements to TH 61 between Egg Lake Road and Frenchman Road. Construction will extend the northbound left-turn lake on TH 61 onto Frenchman Road, add a new southbound left turn lane onto 141st Street, replace the culvert under TH 61, update the pedestrian crossing at Egg Lake Road, revise the signal timing at Frenchman Road and repaint the signal system. The turn lane improvements will require widening of TH 61 and will yield better highway operations and improve safety. Construction is scheduled to begin on July 7, 2025, with TH 61 remaining open to traffic except for a two-week period. TH 61 between Egg Lake Road and Frenchman Road will be closed for a two-week period that is currently scheduled to start July 28th. The detour is extensive and shown on the attached Washington County Construction Newsletter. Additional access information is also included in this newsletter. Washington County has mailed notices to businesses and residents in the area, notified the Washington County Sherrif’s office, Hugo Fire Department, school district, White Bear Lake, Ramsey County etc. Chief Compton has been involved with project planning and is working closely with other emergency response agencies in preparation for the upcoming road closure. Construction is expected to be completed in October. City working hours are 7:00 a.m. to 7:00 p.m. Monday through Friday and 8:00 a.m. to 5:00 p.m. on Saturdays, with no work on Sunday or holidays. The contractor is requesting an extension of the working hours on Saturdays during the road closure. Specifically, they are requesting that working hours be extended to 7:00 a.m. to 7:00 p.m. on Saturdays to limit the duration of the closure. Staff is recommending Council grant the extension or the working hours as requested. If you have any questions or items you wish to discuss, you can contact me at 612-360-1278. Sincerely, WSB & Associates, Inc. Mark Erichson, PE City Engineer Honorable Mayor and City Council July 2, 2025 Page 2 Attachment cc: Bryan Bear, City Administrator, City of Hugo Scott Anderson, Public Works Director, City of Hugo Liz Finnegan, Senior Engineering Technician, City of Hugo Jim Compton Jr., Fire Chief, City of Hugo Rachel Juba, Community Development Director TH 61 Between Egg Lake Road and Frenchman Road Improvements Construction begins July 7 Construction is scheduled to begin on the interim improvements to Trunk Highway (TH) 61 between the two County State Aid Highway (CSAH) 8 segments (Egg Lake Road on the south and Frenchman Road on the north). Construction will start on July 7. Near August, TH 61 between 140th Street N and Frenchman Road will be closed for approximately 2 weeks to replace the culvert just south of 141st Street N. This will include a closure of TH 61 from Frenchman to CR 96. Traffic will be routed to the detour highlighted on the map below that takes traffic from Frenchman Road to I-35E, and around to CR 96. • Access for local traffic will be maintained up to Egg Lake Road. • Access to the neighborhoods east of TH 61 will be maintained from CSAH 8 (Egg Lake Road). • Outside of closure for culvert replacement, the road will be open to through traffic, but using the detour or alternate route is recommended. WASHINGTON COUNTY 108 crashes in the project area between 2013 and 2023 Including: • 67 rear-end crashes • 8 same-direction sideswipe crashes Project area crash data demonstrating safety issues. Road Closed Egg Lake Road 61 Detour Route 35E 61 Road closed to through traﬀic Ha r d w o o d C r e e k R e g i o n a l T r a i l Improve signal timing to support turn lanes needs Widen road to accommodate turn lanes Pedestrian improvements will include new curb ramps and crosswalk striping WASHINGTON COUNTY | TH 61 BETWEEN EGG LAKE ROAD AND FRENCHMAN ROAD IMPROVEMENTS The project team is committed to maintaining access to residences and businesses and providing advance notice of construction and anticipated delays. Scan QR to go to project website. www.washingtoncountymn.gov/TH61 If you have any questions or concerns, please reach out to: Ryan Hoefs ryan.hoefs@washingtoncountymn.gov 651.430.4314. Project improvement:Improvement will: Extending the northbound left-turn lane on TH 61 onto Frenchman Road. Provide additional left-turn lane capacity and address high volume of crashes. Adding a new southbound left turn lane onto 141st Street. Provide additional left-turn lane capacity and address high volume of crashes. Revising the signal timing at Frenchman Road and Egg Lake Road. Provide signal modifications to support turn lanes needs. Updating the pedestrian crossing and ramps at Egg Lake Road.Provide new and improved pedestrian crossings. Washington County, in partnership with the City of Hugo and the Minnesota Department of Transportation, is entering the construction phase of a project to make improvements to TH 61 between Egg Lake Road and Frenchman Road. Washington County obtained a grant through the Minnesota Department of Transportation’s Local Partnership Program for the widening of this section of TH 61 to address safety and congestion issues. 1 7/3/2025 11:43 AM Su Mo Tu We Th Fr Sa 12345678910111213 14 15 16 17 18 1920 21 22 23 24 25 2627 28 29 30 31 July 2025 Su Mo Tu We Th Fr Sa 12345678910 11 12 13 14 15 1617 18 19 20 21 22 2324 25 26 27 28 29 3031 August 2025July 2025 Jun 29 30 Jul 1 2 3 4 5 Independence Day 6 7 8 9 10 11 12 6:00pm Council Photo (Council Chambers) 7:00pm City Council 6:30pm BOZA 7:00pm Planning Comm 6:00pm Concert (Lions Park) 13 14 15 16 17 18 19 5:30pm EDA 6:30pm Hist Comm 7:00pm Parks Comm 20 21 22 23 24 25 26 7:00pm City Council 6:30pm BOZA 7:00pm Planning Comm 27 28 29 30 31 Aug 1 2 SUNDAY MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY SATURDAY 2 7/3/2025 11:43 AM Su Mo Tu We Th Fr Sa 12345678910 11 12 13 14 15 1617 18 19 20 21 22 2324 25 26 27 28 29 3031 August 2025 Su Mo Tu We Th Fr Sa 1234567 8 9 10 11 12 1314 15 16 17 18 19 2021 22 23 24 25 26 2728 29 30 September 2025August 2025 Jul 27 28 29 30 31 Aug 1 2 3 4 5 6 7 8 9 7:00pm City Council 6:00pm Night to Unite 10 11 12 13 14 15 16 6:30pm BOZA 7:00pm Planning Comm 17 18 19 20 21 22 23 7:00pm City Council 5:30pm EDA 6:30pm Hist Comm 7:00pm Parks Comm 6:00pm Midyear Budget Workshop 24 25 26 27 28 29 30 6:30pm BOZA 7:00pm Planning Comm 31 Sep 1 2 3 4 5 6 SUNDAY MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY SATURDAY