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1.1 Findings. The City hereby finds, determines and declares as follows: (a) 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 Bridgewater Bank, a Minnesota banking corporation, or another bank selected by the Borrower(the"Purchaser"). The City will loan the proceeds of the Note(the "Loan") to the Borrower in order to finance the Project. (b) Pursuant to a Loan Agreement (the "Loan Agreement") to be entered into between the City and the Borrower, the City will loan to the Borrower the proceeds of the Note as set forth therein and the Borrower will agree to repay the Loan 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 construction, 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. (c) Pursuant to a Pledge Agreement between the City and the Purchaser (the "Pledge Agreement"), the City will pledge and grant a security interest in all of its rights, title, and interest in the Loan Agreement to the Purchaser (except for certain rights of indemnification and to reimbursement for certain costs and expenses). (d) The proceeds of the Note will be disbursed pursuant to a Disbursing Agreement(the"Disbursing Agreement")by and between the Borrower and the Purchaser. (e) Certain rental and occupancy requirements of federal and state law are set forth in a Regulatory Agreement (the "Regulatory Agreement") by and between the City, the Borrower, and the Purchaser. (f) The Note will be a special, limited obligation of the City. 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 and the interest thereon: (i) shall be payable solely from the revenues pledged therefor under the Loan Agreement; (ii) shall not constitute a debt of the City within the meaning of any constitutional, charter, or statutory limitation; (iii) shall not constitute nor give rise to a pecuniary liability of the City or a charge against its general credit or taxing powers; (iv) shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the City other than the City's interest in the Loan Agreement, which will be assigned to the Purchaser under the Pledge Agreement; and (v) shall not constitute a general or moral obligation of the City. (g) It is desirable, feasible and consistent with the objects and purposes of the Act to issue the Note for the purpose of financing the costs of the Project. (h) The Project constitutes a "qualified residential rental project" within the meaning of Section 142(d) of the Code, and a "multifamily housing development" authorized by the Act, and furthers the purposes of the Act. 3 12119970v3