Loading...
HomeMy WebLinkAboutagenda.council.worksession.20160726 CITY COUNCIL WORK SESSION July 26, 2016 4:00 PM, City Council Chambers MEETING AGENDA I. 4:00 - Site Visits to Marijuana Shops - Meet at Silverpeak Apothecary - Bring ID's II. Sustainability Dashboards Update III. Aspen Country Inn Restructuring and Refinancing P1 1 MEMORANDUM TO: Mayor and City Council FROM: Linda Giudice, Management Analyst THOUGH: Barry Crook, Assistant City Manager Karen Harrington, Director of Quality CJ Oliver, Environmental Health and Sustainability Director Ashley Perl, Climate Action Manager DATE OF MEMO: July 22, 2016 MEETING DATE: July 26, 2016 RE: Sustainability Report REQUEST OF COUNCIL: Staff will be summarizing the findings of the city’s first Sustainability Report. Staff requests the following from Council: 1. Feedback on the approach and depth of the report as written 2. Approval to share the report with others 3. Guidance regarding whether to continue producing the report on a periodic basis, perhaps annually or biennially 4. Direction from Council on expanding the scope to include a social sustainability component, 5. Guidance from Council on preferred uses of the report. Assuming a social sustainability section is added next year, this would include the use of such a section to guide social services grant-making. PREVIOUS COUNCIL ACTION: Council previously called for development of environmental and economic sustainability dashboards. Staff developed sustainability outcomes and metrics with input from subject matter experts and stakeholders. Subsequently, Council reviewed and approved the community-based outcome statements and metrics. Staff previously presented the Environmental Sustainability Dashboard measures to City Council on December 3, 2013, and presented the Economic Sustainability Dashboard measures to City Council in 2015. BACKGROUND: The intention of crafting sustainability dashboards was to provide the City Council and others in the community with a way to more clearly define sustainability, and then assess progress toward that end. After securing Council approval of proposed sustainability outcome statements and P2 II. 2 metrics, staff began collecting the data and information needed to develop these measures and to start building a picture of the state of sustainability in Aspen. During report preparation, staff: • assessed the definitions and boundaries around the proposed metrics • evaluated, collected, and analyzed the data, including its availability and quality • reviewed findings with those who had supplied information to the project team • crafted the measure dashboards and report Today, staff are presenting the report and a summary of findings. The following attachments are provided for the Council’s convenience: • Attachment A: Summary of Findings • Attachment B: Complete Sustainability Report DISCUSSION: While sustainability as a general concept includes the notion of using resources in a way that does not compromise future needs, to have meaning locally it is important to define the term more specifically. The Sustainability Report offers that definition by highlighting the sustainability outcomes the community has identified, providing a detailed exploration of key metrics associated with the outcomes, and summarizing the findings from the data. This first iteration of the report does not include new action recommendations. However, those could be included in future iterations of the report if the Council wishes. Rather, this year’s version focuses on presenting the data and summarizing what it means, while highlighting current City plans and actions. A summary of the outcome statements, metrics and key findings are provided below. Outcome Statements The outcome statements describe what we will see in Aspen if we are sustainable. These statements are based on input from experts and interested parties. Complete versions of the outcome statements are included in Appendix B, the full report. The short versions of the outcomes are provided here: ENVIRONMENTAL OUTCOMES AIR The Aspen community enjoys clean healthy air. Residents and visitors alike expect and value clear skies and unpolluted indoor and outdoor air. ENERGY The Aspen community effectively manages its energy needs while minimizing adverse environmental impacts. PARKS, TRAILS, OPEN SPACE Aspen’s unique blend of natural resources provides wide- ranging habitats, recreation opportunities and connected, accessible places. P3 II. 3 WASTE The amount of waste is minimal, and waste management choices protect the environment. Wastes are minimized through diversion and reuse whenever possible. WATER The Aspen community has a sufficient supply of safe, clean water to satisfy a full range of municipal and other purposes while maintaining healthy streams and rivers. ECONOMIC OUTCOMES APPEAL OF THE ASPEN BRAND Aspen is the destination of choice. Visitors and residents expect and receive the very best of recreational, educational, cultural, and business amenities. TOURISM ACCESS, LODGING AND MOBILITY Visitors to Aspen can readily access the resort via air or ground transport. They have access to modern, safe, and comfortable facilities and amenities. BUSINESS DIVERSITY & SUSTAINABILITY Aspen has a business environment that leads to strong year-round economic health and that caters to a variety of visitors and residents. WORKFORCE SUPPLY AND MATCH Aspen has a sufficient supply of well-qualified workers. Wages are competitive. Excellent transportation options are available to support mobility. LOCAL COMMUNITY VIABILITY Individuals and families can thrive in Aspen with access to affordable housing, childcare, health services, educational, and community engagement opportunities. For each outcome, analysis of up key metrics (typically five or six metrics per outcome) provides tangible evidence of how close we are to the outcome. Due to challenges with data availability or quality, some of these metrics vary from those initial requested by Council for inclusion in the report. Summary of Findings Please refer to Attachment A for a summary of the key findings, as well as dashboard views of the metrics. Those preferring a more in-depth look at the discussion and metrics can find more detail in Appendix B, the full report. SUMMARY: Staff has prepared a Sustainability Report highlighting the status of the Aspen community across the environmental and economic dimensions. Staff suggests using this information to inform discussions and provide a pathway to action in support of sustainability outcomes. For example, Council could use the findings to encourage or request additional information, focus policy attention, or call for program actions to address areas at risk. Some of these discussions could result in the creation of new Top 10 Council goals. In addition, Council could further encourage P4 II. 4 staff to align work plans with the sustainability outcomes and metrics where appropriate, and to reference sustainability impacts in Council memos. Staff further recommends that Council expand the report to include a social sustainability component, which is traditionally included as a part of the “three-legged stool” of sustainability: environmental, social and economic. Without such a component, important aspects of community sustainability are missing or inadvertently subsumed into other sections of the report. Examples include priorities related to family & youth well-being; physical health; mental health & substance abuse prevention; the well-being of seniors; and cultural, recreational, & educational resources/opportunities. Should such a section be added, staff further suggests that appropriate portions be used by Council as a “first filter” or guide in prioritizing requests for social services funding. FINANCIAL/BUDGET IMPACTS: Development of this report has been a collaborative effort between the City Manager’s Office and the Environmental Health and Sustainability Department, using both temporary and permanent staff. In the future, should Council determine this report should be generated on an annual or biennial basis, additional permanent staff time may be requested to help assure continuity and improve efficiency in producing the report. Should permanent staff not be available, resources will continue to be needed in the form of temporary staff. In addition, certain data desired for the report was not available unless purchased. Supplemental requests to purchase data may be made in the future. Finally, the content of the Sustainability Report can be used by City Council in budget decision- making. The report shows where more resources might be used to improve a measure or where existing resources are helping a measure move in the desired direction. ENVIRONMENTAL IMPACTS: This report was prepared to provide information to Council, staff and community members regarding the status of progress toward sustainability. It is intended to be a resource for stakeholders to use, and thereby to support their efforts to reduce key environmental impacts. City staff members are encouraged to reference environmental sustainability measures in memos to City Council, as a way of showing the benefits and tradeoffs of projects. Staff is hopeful that with the increased reference to sustainability measures, this section of the memo will be a useful and meaningful way of further evaluating projects. RECOMMENDED ACTION: Staff requests the following from Council: 1. Feedback on the approach and depth of the report as written 2. Approval to share the report with others 3. Guidance regarding whether to continue producing the report on a periodic basis, perhaps annually or biennially 4. Direction from Council on expanding the scope to include a social sustainability component, P5 II. 5 5. Guidance from Council on preferred uses of the report. Assuming a social sustainability section is added next year, it would include the use of such a section to guide social services grant-making. ALTERNATIVES: Council could elect to forego future production of the report, or request a less in-depth or more in-depth report. In particular, Council could request inclusion of recommended action items in the report, for instance. PROPOSED MOTION: No motion is proposed; rather, guidance from Council is requested. CITY MANAGER COMMENTS: ________________________ ________________________ P6 II. 6 ATTACHMENT A: SUMMARY OF FINDINGS P7 II. 7 ENVIRONMENTAL SUSTAINABILITY DASHBOARD: SUMMARY OF FINDINGS In Aspen, a sustainable environment is one in which natural resources and their use are managed with consideration for the future and in concert with human needs. Aspen’s natural surroundings are definitive to its character and are among the community’s greatest assets. Figure 1. Castle Creek.1 This report speaks to the environmental sustainability of the Aspen community and tracks progress in maintaining a healthy and vibrant way of life. The report is organized into five different categories: Air; Energy; Parks, Trails & Open Space; Waste; and Water. Each of these categories contains 3-4 key performance measures in which specific data is tracked over time to gauge the City’s progress toward greater sustainability. The table below serves as a brief executive summary of the current state of each category as a whole. A concise description of the status of each individual performance measure can be viewed in the Key Findings section of the report. AIR2 Aspen’s outdoor air quality is generally healthy to moderate. But, when negatively impacted by local and regional events, levels have approached those deemed as unhealthy by the EPA. • Between 1993 and 2015, levels of PM 10 (coarse particulates) fell within good to moderate levels. PM 2.5 levels (fine particulates) were more consistently moderate and approaching unhealthy for sensitive populations. • In 2015, average annual daily trips across Castle Creek Bridge were at 98% of 1993 levels. Monthly trips showed traffic counts close to 1993 levels with exceedances in April, November, and December. • Though there is limited data on radon across Aspen, test kits administered by the City of Aspen indicate that a low percentage (27%) of buildings that returned high radon results have since been mitigated successfully. • Between 2010 and 2015, ozone levels were below but closely approaching EPA designated action levels. 1 Babbie, Sheila. 2016. 2 Ibid. P8 II. 8 Seen together, these measures speak to the complex work of striving toward greater environmental 3 Photo: Menges, Chris. 4 Photo: Williamson. Courtesy of City of Aspen Parks Department. 5 Photo: Armstrong, Laura. 2016. 6 Ibid. ENERGY3 Though Aspen has taken strides to enhance sustainable energy use and sourcing in some areas, significant work remains to reach the City’s climate action goals. • In 2015, Aspen Electric, which serves much of the downtown core, sourced 100% of its portfolio from renewable sources. Holy Cross Energy, serving other parts of Aspen and all of the surrounding areas, sourced 30.3%. • Between 2004 and 2014, Aspen reduced its GHG emissions by 7.4%. The community aims to decrease emissions a further 22.6% by 2020. • Between 2004-2014, there has been a 1.8% reduction in total energy use from the built environment in Aspen. In 2014, energy use from the built environment comprised 70.1% of total energy use. • In 2015, ridership on City of Aspen buses was 1,078,865, which is consistent with rates since 2010 and a decrease from 2008-2009. PARKS, TRAILS & OPEN SPACE4 There is a wealth of parks, trails, and open space available for Aspen residents and visitors. • The City owns and maintains 25.9 miles of trails, 204 acres of parks, and 327 acres of open space in the urban growth boundary. Aspen partners with neighboring jurisdictions to own and jointly maintain 566 additional acres of open space in the greater Aspen area. • Aspen’s urban tree canopy covers 31% of the city. • The ACES Forest Health Index indicates that the forests of the Roaring Fork Valley are healthy and in the range of natural variability, receiving an overall score of 86 out of 100, the highest index score recorded in its 3 years of compilation. WASTE5 Aspen has great opportunity to expand the sustainability of its waste practices. • No air quality violations were found at the Pitkin County Solid Waste Center (PCSWC) in 2015. There were several instances of organic and inorganic groundwater pollutants, for which the PCSWC is meeting remediation requirements. • Aspen’s 2015 municipal solid waste diversion rate was 21.3%, which is significantly lower than the national average of 34.3% and Aspen’s goal of 50%. • As of 2016, the PCSWC has an estimated lifespan of 15 years. WATER6 The sustainability of Aspen’s water production and consumption is largely pending further data collection. River and stream health varies on a case-by-case basis. • Between 1995 and 2013, there was an overall decrease in total treated water production in Aspen. • In every year between 2006 and 2015, the Roaring Fork failed to meet the instream flow during its annual 7-day low. Between 2013 and 2015, Castle Creek remained above the dedicated instream flow rate. P9 II. 9 sustainability in Aspen. While many important steps have already been taken in this effort, the community must continue to make strides in every sector in order to see its desired outcomes become reality. P10 II. 10 EN V I R O N M E N T A L D A S H B O A R D : S U M M A R Y O F F I N D I N G S Pe r f o r m a n c e M e a s u r e T a r g e t S e t C u r r e n t S t a t u s : AI R Le v e l s o f p a r t i c u l a t e m a t t e r Y In 2 0 1 5 , A s p e n ’ s l e v e l s o f PM 1 0 a n d P M 2 . 5 w e r e b e l o w E P A ’ s N a t i o n a l A m b i e n t Ai r Q u a l i t y S t a n d a r d ( t h e le v e l a t w h i c h a i r i s d e e m e d u n h e a l t h y a n d r e q u i r e s r e m e d i a t i o n ) . T h e t o p 1 0 P M 1 0 l e v e l s i n 2 0 1 5 f e l l b e t w e e n 60 a n d 8 4 p p m , s i g n i f i c a n t l y b e l o w t h e N A A Q S l e v e l of 1 5 0 p p m ( a n d a r e t h e r e f o r e r a n k e d i n g r e e n ) , w h e r ea s th e t o p PM 2 . 5 c o n c e n t r a t i o n s w e r e b e t w e e n 2 0 a n d 2 8 p p m , s ig n i f i c a n t l y c l o s e r t o t h e N A A Q S l e v e l o f 3 5 pp m ( a n d a r e t h e r e f o r e r a n k e d i n y e l l o w ) . Ca s t l e C r e e k b r i d g e t r a f f i c c o u n t s Y Av e r a g e a n n u a l d a i l y v e h i c l e t r i p s a c r o s s C a s t l e C r e e k B r i d g e w e r e fe w e r t h a n 1 9 9 3 c o u n t s , t h e l e v e l t h a t As p e n i s c o m m i t t e d t o n o t e x c e e d i n g . H o w e v e r , mo n t h l y c o m p a r i s o n s s h o w t h a t i n 2 0 1 5 , t h e n u m b e r o f d a i l y tr i p s i n Ap r . , N o v . , a n d D e c . d i d e x c e e d 1 9 9 3 m o n t h l y l e v e l s . Ra d o n l e v e l s a n d m i t i g a t i o n Y In g e n e r a l , C o l o r a d o h a s h i g h l e v e l s o f r a d o n . I n A sp e n , o f t h o s e h o m e s t h a t h a v e s h a r e d t h e i r r e s u l t s w i t h t h e De p a r t m e n t o f E n v i r o n m e n t a l H e a l t h a n d r e c e i v e d h i g h r a d o n t e s t r e s u l t s , on l y 2 7 . 4 1 % h a v e m i t i g a t e d su c c e s s f u l l y . A s p e n a i m s t o i n c r e a s e t h e a m o u n t o f su c c e s s f u l m i t i g a t i o n s ( o f t h o s e b u i l d i n g s w h o h a v e sh a r e d d a t a w i t h t h e c i t y ) t o 5 0 % . Oz o n e l e v e l s Y As p e n ’ s g r o u n d o z o n e l e v e l s a r e be l o w , t h o u g h a p p r o a c h i n g , t h e E P A ’ s N a t i o n a l A m b i e nt A i r Q u a l i t y St a n d a r d . I n 2 0 1 5 , g r o u n d l e v e l o z o n e p e a k e d i n A p r i l - J u n e , w h i c h m a y b e a t t r i b u t a b l e t o t h e r e l e a s e o f te r p e n e s f r o m b u d d i n g t r e e s . TA R G E T S T A T U S K E Y GR E E N ME E T I N G O R E X C E E D I N G YE L L O W NO T M E E T I N G ; W I T H I N R A N G E RE D NO T M E E T I N G GR A Y NO T A R G E T S E T P11 II. 11 EN V I R O N M E N T A L D A S H B O A R D : S U M M A R Y O F F I N D I N G S Pe r f o r m a n c e M e a s u r e T a r g e t S e t C u r r e n t S t a t u s EN E R G Y Pe r c e n t a g e o f e l e c t r i c a l e n e r g y f r o m re n e w a b l e s o u r c e s Y As p e n E l e c t r i c s o u r c e s 1 0 0 % o f i t s e l e c t r i c i t y f r o m r e n e w a b l e s o u r c e s , a n d w i l l n e e d t o a c t i v e l y m a i n t a i n a n d ac q u i r e s u c h c o n t r a c t s t o e n s u r e t h a t t h i s l e v e l i s m e t i n t h e f u t u r e . T o f o c u s o n a l l o f t h e e l e c t r i c it y c o n s u m e d in A s p e n , c o l l a b o r a t i o n w i t h H o l y C r o s s E n e r g y ( w h i ch h a d 3 0 . 3 % i n 2 0 1 5 ) t o e n c o u r a g e a h i g h e r p e r c e n t ag e o f re n e w a b l e s i n t h e i r p o r t f o l i o w i l l b e c r u c i a l . Co m m u n i t y - w i d e g r e e n h o u s e g a s em i s s i o n s Y Be t w e e n 2 0 0 4 a n d 2 0 1 4 , A s p e n r e d u c e d i t s G H G e m i s s i on s b y 7 . 4 % . Th e c o m m u n i t y w i l l n e e d t o f u r t h e r c u t 22 . 6 % o f e m i s s i o n s t o m e e t t h e f i r s t s t e p o f i t s G H G r e d u c t i o n g o a l s : 3 0 % r e d u c t i o n b y 2 0 2 0 , 8 0 % r e d u c ti o n by 2 0 5 0 . A t t h e t i m e o f p u b l i s h i n g , t h e c o m m u n i t y o f A s p e n i s i n t h e m i d s t o f a c l i m a t e a c t i o n p l a n n i n g p r o c e ss to t a r g e t a n d i m p l e m e n t s e c t o r - s p e c i f i c G H G r e d u c t i on s . En e r g y u s e f r o m t h e b u i l t en v i r o n m e n t N Be t w e e n 2 0 0 4 - 2 0 1 4 , t h e r e h a s b e e n a 1 . 8 % r e d u c t i o n in t o t a l e n e r g y u s e f r o m t h e b u i l t e n v i r o n m e n t i n As p e n . N o s p e c i f i c t a r g e t h a s b e e n s e t y e t f o r t h i s m e a s ur e . Ma s s t r a n s i t u s e Y Si n c e 2 0 0 6 , t o t a l a n n u a l r i d e r s h i p o n C i t y o f A s p e n r o u t e s h a s r e m a i n e d a b o v e 1 m i l l i o n . I n 2 0 1 5 , t h e r e w e r e a t o t a l o f 1 , 0 7 8 , 8 6 5 r i d e s . T o a i m h i g h e r a n d d r i v e f u r t h e r i n n o v a t i o n i n t h i s s e c t o r , t h e c i t y c o u l d se t a n as p i r a t i o n a l t a r g e t a b o v e 1 m i l l i o n r i d e s i n t h e f u tu r e . TA R G E T S T A T U S K E Y GR E E N ME E T I N G O R E X C E E D I N G YE L L O W NO T M E E T I N G ; W I T H I N R A N G E RE D NO T M E E T I N G GR A Y NO T A R G E T S E T P12 II. 12 EN V I R O N M E N T A L D A S H B O A R D : S U M M A R Y O F F I N D I N G S Pe r f o r m a n c e M e a s u r e T a r g e t S e t C u r r e n t S t a t u s PA R K S , T R A I L S , & O P E N S P A C E Ac r e s o f p a r k s , t r a i l s , a n d o p e n sp a c e Y As p e n ’ s t a r g e t i s t o r e t a i n i t s c u r r e n t h o l d i n g s o f p a r k s , t r a i l s , a n d o p e n s p a c e . T h e c i t y o w n s a n d m ai n t a i n s 25 . 9 m i l e s o f t r a i l s a n d 3 0 p a r k s o n 2 0 4 a c r e s o f l a n d . A d d i t i o n a l l y , t h e C i t y o w n s 32 7 a c r e s o f o p e n s p a c e i n th e u r b a n g r o w t h b o u n d a r y a n d pa r t n e r s w i t h n e i g h b o r i n g j u r i s d i c t i o n s t o o w n a n d jo i n t l y m a i n t a i n 5 6 6 ac r e s i n t h e g r e a t e r A s p e n a r e a . Co m m u n i t y f o r e s t c o v e r a g e Y In 2 0 1 5 , 31 % o f A s p e n w a s c o v e r e d b y u r b a n t r e e c a n o p y . A s p e n ’ s g o a l i s t o m a i n t a i n t h i s c o v e r m o v i n g fo r w a r d . Fo r e s t H e a l t h I n d e x ( A C E S ) Y In 2 0 1 5 , t h e F o r e s t H e a l t h I n d e x o f t h e R o a r i n g F o r k V a l l e y e a r n e d a s c o r e o f 86 o u t o f 1 0 0 , i n d i c a t i n g f o r e s t he a l t h w e l l w i t h i n t h e r a n g e o f n a t u r a l v a r i a b i l i t y . Sc o r e s b e t w e e n 8 1 - 1 0 0 e x h i b i t n o r m a l c o m p o s i t i o n , st r u c t u r e , a n d f u n c t i o n . S c o r e s b e l o w 8 0 d e p a r t f r o m t h e n a t u r a l r a n g e o f v a r i a b i l i t y . T h e 2 0 1 3 s c o r e wa s 7 8 an d 2 0 1 4 w a s 8 4 . TA R G E T S T A T U S K E Y GR E E N ME E T I N G O R E X C E E D I N G YE L L O W NO T M E E T I N G ; W I T H I N R A N G E RE D NO T M E E T I N G GR A Y NO T A R G E T S E T P13 II. 13 EN V I R O N M E N T A L D A S H B O A R D : S U M M A R Y O F F I N D I N G S Pe r f o r m a n c e M e a s u r e T a r g e t S e t C u r r e n t S t a t u s WA S T E Le v e l s o f w a t e r a n d a i r p o l l u t i o n a t th e l a n d f i l l Y Ai r q u a l i t y e m i s s i o n s at t h e P i t k i n C o u n t y S o l i d W a s t e C e n t e r a r e be l o w t h e C o l o r a d o D e p a r t m e n t o f P u b l i c He a l t h a n d t h e E n v i r o n m e n t ’ s l i m i t s f o r r e q u i r e d r e me d i a t i o n , w h i l e gr o u n d w a t e r p o l l u t i o n w a s a b o v e . Ho w e v e r , t h e s i t e i s i n c o m p l i a n c e w i t h a l l c o r r e c t iv e m e a s u r e s m a n d a t e d b y t h e C D P H E . Mu n i c i p a l s o l i d w a s t e d i v e r s i o n Y As p e n ’ s m u n i c i p a l s o l i d w a s t e d i v e r s i o n r a t e w a s 2 1 .3 % i n 2 0 1 5 , w e l l b e l o w t h e 2 0 1 3 n a t i o n a l a v e r a g e o f 34 . 3 % a n d A s p e n ’ s g o a l o f d i v e r t i n g a t l e a s t 5 0 % . L a r g e o p p o r t u n i t i e s h a v e b e e n i d e n t i f i e d t o d i v e r t co m m e r c i a l f o o d a n d y a r d w a s t e . A t t h e t i m e o f p u b l is h i n g , t h e C i t y o f A s p e n i s u n d e r g o i n g a w a s t e s t u dy t o id e n t i f y d i v e r s i o n o p p o r t u n i t i e s i n m u n i c i p a l s o l i d w a s t e a n d c o n s t r u c t i o n a n d d e m o l i t i o n d e b r i s . Am o u n t o f l a n d f i l l s p a c e a v a i l a b l e Y As o f s p r i n g 2 0 1 6 , t h e P i t k i n C o u n t y L a n d f i l l e s t i m at e s t h a t i t h a s 15 m o r e y e a r s o f o p e r a t i o n . A s p e n ’ s g o a l i s to m a i n t a i n t h a t a n d n o t s e e i t d e c r e a s e m o r e q u i c k ly . L i f e s p a n w i l l d e p e n d o n w a s t e v o l u m e , d i v e r s i o n , co m p a c t i o n , a n d p o t e n t i a l e x p a n s i o n . T h e L a n d f i l l h as a l s o d e v e l o p e d a p r o p o s a l , p e n d i n g a p p r o v a l , t o ad d a n ex p a n s i o n t o t h e l a n d f i l l t o e x t e n d i t s l i f e f o r a p pr o x i m a t e l y 1 0 m o r e y e a r s . Nu m b e r o f W e e k l y M i l e s W a s t e Tr a v e l s f o r P r o c e s s i n g N Wh i l e r e c y c l i n g i s r e s p o n s i b l e f o r t h e b u l k o f w a s t e h a u l i n g t r a n s p o r t a t i o n m i l e s i n t h e R o a r i n g F o r k Va l l e y , As p e n h a s l i t t l e c o n t r o l o v e r t h i s m a r k e t . O n t h e o th e r h a n d , A s p e n c a n i n f l u e n c e a s h i f t t o w a r d d i v e r ti n g m o r e mu n i c i p a l s o l i d w a s t e t o c o m p o s t i n g , w h i c h w o u l d e x te n d t h e l i f e s p a n o f t h e P i t k i n C o u n t y L a n d f i l l . On c e t h i s la n d f i l l i s c l o s e d , t h e m i l e s t h a t A s p e n ’ s t r a s h t r av e l s w i l l i n c r e a s e s i g n i f i c a n t l y . TA R G E T S T A T U S K E Y GR E E N ME E T I N G O R E X C E E D I N G YE L L O W NO T M E E T I N G ; W I T H I N R A N G E RE D NO T M E E T I N G GR A Y NO T A R G E T S E T P14 II. 14 EN V I R O N M E N T A L D A S H B O A R D : S U M M A R Y O F F I N D I N G S Pe r f o r m a n c e M e a s u r e T a r g e t S e t C u r r e n t S t a t u s WA T E R Ac r e f e e t o f t r e a t e d w a t e r p r o d u c e d N Be t w e e n 1 9 9 5 a n d 2 0 1 3 , t h e r e w a s a n o v e r a l l d e c r e a s e i n t o t a l t r e a t e d w a t e r p r o d u c t i o n i n A s p e n . T h i s me a s u r e w i l l b e f u r t h e r e v a l u a t e d w h e n 2 0 1 4 - 2 0 1 5 d a ta b e c o m e s a v a i l a b l e . Fl o w r a t e s i n r i v e r s a n d s t r e a m s Y Be t w e e n 2 0 1 3 a n d 2 0 1 5 , C a s t l e C r e e k n e v e r d r o p p e d b el o w t h e d e d i c a t e d i n s t r e a m f l o w r a t e (t h i s r i v e r i s ra n k e d : g r e e n ) . I n c o n t r a s t , i n e v e r y y e a r be t w e e n 2 0 0 6 a n d 2 0 1 5 , t h e R o a r i n g F o r k h a s f a i l e d to m e e t t h e in s t r e a m f l o w d u r i n g i t s a n n u a l 7 - d a y l o w (t h i s r i v e r i s r a n k e d : r e d ) . Fl o w s o n H u n t e r C r e e k a n d p o s s i b l y Ma r o o n C r e e k m a y b e a d d e d t o t h i s m e a s u r e i n t h e f u tu r e . Wa t e r a v a i l a b i l i t y N Da t a f o r t h i s m e a s u r e i s p e n d i n g c o m p l e t i o n o f t h e As p e n W a t e r A v a i l a b i l i t y S t u d y . Ma c r o i n v e r t e b r a t e p o p u l a t i o n s i n ri v e r s a n d s t r e a m s N Da t a f o r t h i s m e a s u r e i s p e n d i n g . TA R G E T S T A T U S K E Y GR E E N ME E T I N G O R E X C E E D I N G YE L L O W NO T M E E T I N G ; W I T H I N R A N G E RE D NO T M E E T I N G GR A Y NO T A R G E T S E T P15 II. 15 ECONOMIC SUSTAINABILITY DASHBOARD: SUMMARY OF FINDINGS Economic sustainability in Aspen means having the resources and assets to support a robust tourist-based and residential economy year-round. This means that the economy has an optimal level of productive capacity, and that economic activities are in balance with the natural and social environment. In this first rendering of the economic sustainability dashboard, most of the performance measures do not yet have targets. Where possible, measures are compared to industry benchmarks. Until these measures have targets, it is not possible to fully assess their performance. Overall, the data sourced to date provides initial insight about the respective outcome areas as presented in this Summary of Findings. APPEAL OF ASPEN BRAND To understand the appeal of the ‘Aspen Brand’ it is important to have a sense of who the visitors are and why they visit. • Despite some available demographic data, no mechanism exists for tracking the total number of visitors to Aspen. • The median age of summer visitors is approximately 49 years of age. In winter, the average age of guests is between 41-44 years of age. Based on ACRA summer surveys, the 45-54 and 55-64 age groups are the largest at 22%. The 18-24 age group represents the smallest group at 6%. Demographics are presenting a challenge and opportunity to attract and engage visitors of all ages. • Within the survey sample, visitors express high satisfaction with their Aspen Experience. More robust surveying and analysis of the visitor population and is needed in the future in order to target and focus actions to attract and satisfy them. In 2015, the Colorado Tourism Office commissioned a report entitled Colorado Travel Impacts 1996 – 2014p. 7 The report provides data on the economic impact of visitors at the state, regional, and county levels. Figure 1 shows the comparative data for Pitkin County and the State of Colorado. Figure 1. Visitor Economic Impacts Economic Indicators Pitkin County Colorado Travel Spending 668 ($M) 18.6 ($B) Earnings 246.2 ($M) 5.1 ($B) Employment (Jobs) 4.7 (K) 155 (K) Local Taxes 28.9 ($M) 1.1 ($B) State Taxes 5.8 ($M) For example, Figure 2 (below) illustrates the increase in industry earnings and employment from 2010– 2014 generated from Pitkin County visitors. This appears to show a current positive trend. 7 Colorado Travel Impacts 1996-2014p, Dean Runyan Associates (Commissioned by Colorado Tourism Office) Via link: http://www.colorado.com/sites/default/master/files/Runyan_TravelImpacts_2014.pdf. Retrieved April – July 2016. P16 II. Discovery of the visitor economic impact data for the Pitkin County region is useful. Overall, it gives insight into the magnitude of the visitor based economy. However, a more in depth analysis of the data and methodology for collection and future use is The portfolio of economic sustainability key performance measures demonstrate what makes Aspen attractive to visit. They also give an idea of the magnitude and capacity of Aspen’s tourist local economy. Highlights are summari TOURISM ACCESS, LODGING, & MOBILITY Airport/airline capacity and lodging occupancy indicate part of the visitor demand for a place, especially at peak and off peak times. • Commercial airlines have increased to 3 providers and capacity is high (over 90%) with approximately 750 flights per month. • In 2015, the total lodging capacity (pillow count) was 9,193. The total pillow count decreased by 2% from 2009 to 2015. There appea shift in the mix in favor of the community goals to support a diverse lodging base. Demand for lodging during peak seasons remains solid with occupancy rates between 70 to 75%. • Qualitative ratings of walkabili relatively good performance and continuous improvement in these areas. The performance indicators appear to be relatively stable based on the historical trend. Inevitably, there are further opportunities to optimize infrastructure, operating efficiencies, and quality attributes especially in light of competition for visitors. BUSINESS DIVERSITY & The business community of Aspen is diverse and steady. appears to be trending in a positive direction with moderate growth in taxable 193.4 193.9 4190 3900 4000 4100 4200 4300 4400 4500 4600 4700 4800 2010 2011 Em p l o y m e n t ( J o b s ) Figure 2. Annual Industry Earnings and Employment Generated from Pitkin County Visitors (2010 Discovery of the visitor economic impact data for the Pitkin County region is useful. Overall, it gives insight into the magnitude of the visitor based economy. However, a more in depth analysis of the data and methodology for collection and future use is considered prudent. The portfolio of economic sustainability key performance measures demonstrate what makes Aspen attractive to visit. They also give an idea of the magnitude and capacity of Aspen’s tourist local economy. Highlights are summarized below. Airport/airline capacity and lodging occupancy indicate part of the visitor demand for a place, especially at peak and off peak times. Commercial airlines have increased to 3 providers and capacity is high (over 90%) with approximately 750 flights per month. In 2015, the total lodging capacity (pillow count) was 9,193. The total pillow count decreased by 2% from 2009 to 2015. There appea shift in the mix in favor of the moderate category, consistent with community goals to support a diverse lodging base. Demand for lodging during peak seasons remains solid with occupancy rates between 70 to 75%. Qualitative ratings of walkability, bike-ability and transit indicates relatively good performance and continuous improvement in these areas. The performance indicators appear to be relatively stable based on the historical trend. Inevitably, there are further opportunities to optimize infrastructure, operating efficiencies, and quality attributes especially in light of competition for visitors. The business community of Aspen is diverse and steady. Economic activity appears to be trending in a positive direction with moderate growth in taxable 193.9 206.9 225.9 246.2 4191 4301 4496 4698 $0 $50 $100 $150 $200 $250 $300 2011 2012 2013 2014 Figure 2. Annual Industry Earnings and Employment Generated from Pitkin County Visitors (2010 - 2014) Earnings Employment 16 Discovery of the visitor economic impact data for the Pitkin County region is useful. Overall, it gives insight into the magnitude of the visitor based economy. However, a more in depth analysis of the data The portfolio of economic sustainability key performance measures demonstrate what makes Aspen attractive to visit. They also give an idea of the magnitude and capacity of Aspen’s tourist-based and Airport/airline capacity and lodging occupancy indicate part of the visitor Commercial airlines have increased to 3 providers and capacity is high (over 90%) with approximately 750 flights per month. In 2015, the total lodging capacity (pillow count) was 9,193. The total pillow count decreased by 2% from 2009 to 2015. There appears to be a category, consistent with community goals to support a diverse lodging base. Demand for lodging during peak seasons remains solid with occupancy rates between 70 to ability and transit indicates relatively good performance and continuous improvement in these The performance indicators appear to be relatively stable based on the historical trend. Inevitably, there are further opportunities to optimize infrastructure, operating efficiencies, and quality attributes especially in light of Economic activity appears to be trending in a positive direction with moderate growth in taxable $0 $50 $100 $150 $200 $250 $300 Do l l a r s i n M i l l i o n s P17 II. 17 SUSTAINABILITY sales and quantity of business licenses. • Since 2004, economic activity in Aspen (reported as total taxable sales) has steadily increased (2.2%) year-on-year. As expected, Aspen businesses’ sales differ considerably between on and off seasons. Historically, May and December are the lowest and highest average sales months. • Over the past six years, the top business types in Aspen have remained relatively consistent. While business types have changed little from 2010-2015, the categories of businesses remain diverse and suited for peak as well as off seasons. Generally, business diversity and sustainability is subject to market forces (supply and demand). Further work can be done to understand the capacity for businesses that are operating in the on and off-season and whether this suits community and visitor needs. WORKFORCE SUPPLY & MATCH The size and composition of the valley workforce appears to be relatively stable and consistent with what you would expect to see post downturn (2008/2009). • While the size of the valley workforce contracted from 37,000 (2008) to 33,000 (2014), the composition of occupations remained relatively stable. Arts, Entertainment, Recreation, Accommodation, and Food consistently at the top. • In 2015, Pitkin County (Aspen/Snowmass) had the highest annual wages (compared to peer counties) reported at $59,488. Pitkin County annual average wage increased by approximately 29% from 2011 to 2015 which is likely attributed to a rebound in hiring and wages post the economic downturn in 2008/2009. • The total number of Aspen workforce members living within the Urban Growth Boundary (UGB) is unknown. It should be noted that 38% of City of Aspen FTE workforce live within the UGB. • While housing supply does not perfectly meet demand, 90% (owners) and 70% (renters) of APCHA employed households are not cost burdened. • The average workforce member (travelling from mid valley) spends approximately $2,100 or (3.5%) of annual wages commuting by bus. The annual round trip cost of commuting by bus is calculated at approximately one fifth (20%) of what it costs for drive alone commute for the same distance (Aspen/Carbondale). • Subsidized / free bus passes totaling 1,185 (627 - winter and 558 – summer) are purchased by approximately 50 employers for the benefit of their employees. Demand for affordable housing and low cost transportation options remain key issues especially given the relative cost of living. Workforce development as a contributor to the economy is an opportunity. P18 II. 18 LOCAL COMMUNITY VIABILITY Aspen’s local community viability relates to its economic and social capacity to sustain its residents (e.g. income, employment, housing, childcare, education, and engagement) and relative quality of life. • From 2009-2014, the city’s median household income has on average grown minimally but steadily (average increase of 1.3% year-on-year). • Over the same period, the averaged city unemployment rate is rising but remains lower than the national period average. • Basic necessities of housing and childcare are in high demand relative to affordable supply. • Meanwhile, health insurance costs in the county indicate a competitive cost split for employees. • High school graduation rates have been consistently high (over 90%) which suggest a high standard of education. • City voter participation averages around 2,252 ballots cast in regular elections which implies citizens care about their community and the issues that face it. These key performance indicators suggest reasonably good local community viability. With the relatively high cost of living, accessibility to affordable housing, childcare, and healthcare remain key issues. Collectively, these key performance measures demonstrate robust tourist access and residential demand for a place. They give a relatively good insight as to how appealing the Aspen community remains as a brand and how important this is in sustaining the local economy. The economic sustainability dashboard provides an ‘at a glance view’ of how the community is doing on each measure. And what this means for future consideration and opportunities for continuous improvement. Photos (in order above): Giudice L.; Babbie, S.; Holder. M; Kolacek, Z.; Aspen Times P19 II. 19 EC O N O M I C S U S T A I N A B I L I T Y D A S H B O A R D : S U M M A R Y O F F I N D I NG S Pe r f o r m a n c e M e a s u r e T a r g e t S e t Cu r r e n t S t a t u s AP P E A L O F T H E A S P E N B R A N D Ec o n o m i c i m p a c t o f v i s i t o r s t o Pi t k i n C o u n t y N Vi s i t o r s p e n d i n g i n P i t k i n C o u n t y i n c r e a s e d s t e a d i l y f r o m $ 5 8 6 . 6 M i n 2 0 1 0 t o $ 6 6 8 M i n 2 0 1 4 . T h i s r e p re s e n t s a 1 4 % in c r e a s e o v e r t h e p e r i o d . T o t a l d i r e c t t r a v e l s p e n d in g i n C o l o r a d o d u r i n g 2 0 1 4 w a s $ 1 8 . 6 b i l l i o n d o l l a rs . Me d i a n a g e o f v i s i t o r s b y a g e gr o u p ( s u m m e r / w i n t e r ) N Th e m e d i a n a g e o f v i s i t o r s i s a p p r o x i m a t e l y 4 9 ( s u m me r ) a n d a v e r a g e a g e b e t w e e n 4 1 – 4 4 ( w i n t e r ) . T h e la r g e s t a g e gr o u p s r e p r e s e n t e d w e r e 4 5 - 5 4 a n d 1 8 - 2 4 w i t h 2 2 % e a ch w i t h t h e y o u n g e s t a g e g r o u p 1 8 - 2 4 a t 6 % . [ N o t e : AC R A su r v e y d a t a u s e d f o r s u m m e r m e d i a n a g e ; g r o u p d i s t r ib u t i o n . A s p e n S k i i n g C o m p a n y d a t a u s e d f o r w i n t e r av e r a g e ag e r a n g e ] Sa t i s f a c t i o n l e v e l o f k e y v i s i t o r gr o u p s ( s u m m e r ) N Ac c o r d i n g t o t h e A C R A s u m m e r s u r v e y ( 2 0 1 4 ) , v i s i t o r s a p p e a r t o b e q u i t e s a t i s f i e d w i t h t h e i r A s p e n e x p er i e n c e w i t h an a v e r a g e r a t i n g o f 9 . 1 o u t o f 1 0 . [ N o t e : T h i s i s a l i m i t e d s a m p l e o f t h e s u m m e r v i s i t o r p o p u l a t i o n A CR A s u r v e y d a t a ev e r y s e c o n d y e a r ] % o f v i s i t o r s w h o a r e r e p e a t vi s i t o r s ( s u m m e r ) N Fr o m 2 0 0 6 t o 2 0 1 4 , a v e r a g e r e t e n t i o n r a t e s a m o n g v i si t o r s s u r v e y e d i s 6 8 % . D u r i n g t h e s a m e p e r i o d t h e r e w a s a n ab s o l u t e i n c r e a s e f r o m 6 7 % ( 2 0 0 6 ) t o 7 0 % ( 2 0 1 4 ) . [ N ot e : T h i s i s a l i m i t e d s a m p l e o f t h e s u m m e r v i s i t o r p o p u l a t i o n AC R A s u r v e y d a t a e v e r y s e c o n d y e a r ] TA R G E T S T A T U S K E Y GR E E N ME E T I N G O R E X C E E D I N G YE L L O W NO T M E E T I N G ; W I T H I N R A N G E RE D NO T M E E T I N G GR A Y NO T A R G E T S E T P20 II. 20 8 St a t i s t i c a . ht t p : / / w w w . s t a t i s t a . c o m / s t a t i s t i c s / 2 0 0 1 6 1 / u s - a n n u a l -a c c o m o d a t i o n - a n d - l o d g i n g - o c c u p a n c y - r a t e / . R e t r i e v e d J u l y 2 0 1 6 . Pe r f o r m a n c e M e a s u r e T a r g e t S e t C u r r e n t S t a t u s TO U R I S M A C C E S S , L O D G I N G , & M O B I L I T Y To t a l n u m b e r o f s h o r t - t e r m be d s ( p i l l o w c o u n t ) a v a i l a b l e , b y ty p e N De s t i m e t r i c d a t a ( 2 0 0 9 – 2 0 1 5 ) s h o w s t h a t t o t a l p i l l o w d e c r e a s e d f r o m 9 , 3 8 5 t o 9 1 9 3 ( - 2 % ) i n t h a t p e r i o d . I n t e r m s o f th e m i x , t h e de l u x e c a t e g o r y d r o p p e d f r o m 5 , 8 0 4 t o 5 , 0 3 4 ( - 1 5 % ) ; t h e mo d e r a t e c a t e g o r y i n c r e a s e d f r o m 3 , 2 1 3 t o 3, 7 7 3 ( + 1 5 % ) ; t h e ec o n o m y c a t e g o r y i n c r e a s e d s l i g h t l y f r o m 3 6 8 t o 3 8 6 p i l l o w s ( + 5 % ) . [ N o t e t h i s d o e s n o t a c c o u n t fo r A i r b n b p o t e n t i a l l y c o n t r i b u t i n g a d d i t i o n a l c a p a ci t y ( u n q u a n t i f i e d ) t o t h e o v e r a l l l o d g i n g i n v e n t o r y ( p i l l o w c o u n t ) . ] Oc c u p a n c y r a t e ( b y m o n t h ) N Oc c u p a n c y r a t e s r a n g e b e t w e e n 7 0 t o 7 5 % i n p e a k s e a so n s ( w i n t e r a n d s u m m e r ) . A c c o r d i n g t o S t a t i s t a ’ s T ra v e l To u r i s m & H o s p i t a l i t y / A c c o m m o d a t i o n s t a t i s t i c s , t he o c c u p a n c y r a t e f o r U S h o t e l s i n 2 0 1 5 w a s 6 3 % . 8 Va l u e f o r p r i c e f o r l o d g i n g (s u m m e r ) N Ac c o r d i n g t o t h e A C R A s u m m e r s u r v e y s ( 2 0 0 6 - 2 0 1 4 ) , v is i t o r s o n a v e r a g e r a t e d t h e v a l u e f o r p r i c e f o r l o dg i n g a t ap p r o x i m a t e l y 8 o u t o f 1 0 . T h e i n d i v i d u a l s s u r v e y e d r a t e a t t r i b u t e s b a s e d o n a s c a l e f r o m 1 ( po o r ) t o 1 0 ( ex c e l l e n t ). [N o t e : T h i s i s a l i m i t e d s a m p l e o f t h e s u m m e r v i s i t or p o p u l a t i o n e v e r y s e c o n d y e a r ] # o f n o n - s t o p a i r l i n e ro u t e s / t r i p s t o A s p e n ( m o n t h l y ) N Fr o m 2 0 0 5 t o 2 0 1 6 t h e a v e r a g e n u m b e r o f r o u t e s p e r ye a r w a s 4 . 7 4 w i t h a s t e a d y i n c r e a s e t o 6 r o u t e s b y 2 0 1 5 . Du r i n g t h i s s a m e p e r i o d , t h e a v e r a g e m a x i m u m t r i p s pe r m o n t h w a s a p p r o x i m a t e l y 7 5 0 . # o f a i r l i n e s s e r v i n g A s p e n du r i n g d i f f e r e n t s e a s o n s (m o n t h l y ) N Ov e r t h e y e a r s ( 2 0 1 3 - 2 0 1 6 ) , t h e p e a k n u m b e r o f a i r l in e s p e r y e a r h a s s e t t l e d a t 3 . A t c u r r e n t , t h e p r i ma r y co m m e r c i a l c a r r i e r s a r e U n i t e d , D e l t a , a n d A m e r i c a n . Qu a l i t a t i v e r a t i n g s o f wa l k a b i l i t y , b i k e - a b i l i t y , a n d tr a n s i t N Qu a l i t a t i v e r a t i n g s o f w a l k a b i l i t y , b i k e - a b i l i t y a n d t r a n s i t i n d i c a t e s r e l a t i v e l y g o o d p e r f o r m a n c e a n d c o n t i n u o u s im p r o v e m e n t i n t h e s e a r e a s . TA R G E T S T A T U S K E Y GR E E N ME E T I N G O R E X C E E D I N G YE L L O W NO T M E E T I N G ; W I T H I N R A N G E RE D NO T M E E T I N G GR A Y NO T A R G E T S E T EC O N O M I C S U S T A I N A B I L I T Y D A S H B O A R D : S U M M A R Y O F F I N D I NG S P21 II. 21 EC O N O M I C S U S T A I N A B I L I T Y D A S H B O A R D : S U M M A R Y O F F I N D I NG S Pe r f o r m a n c e M e a s u r e T a r g e t S e t C u r r e n t S t a t u s BU S I N E S S D I V E R S I T Y & S U S T A I N A B I L I T Y As p e n e c o n o m i c a c t i v i t y l e v e l N Fr o m 2 0 0 5 - 2 0 1 5 , A s p e n ’ s t o t a l t a x a b l e s a l e s i n c r e a s ed 2 2 . 6 % ( a d j u s t e d f o r i n f l a t i o n t o 2 0 1 5 d o l l a r s ) . Ye a r - o n - y e a r , ta x a b l e s a l e s c h a n g e 2 . 2 % o n a v e r a g e . I n 2 0 0 9 , t h e r e w a s a n o b s e r v a b l e d e c r e a s e o f - 1 2 % i n t a x a b l e s a l es r e l a t e d t o th e e c o n o m i c d o w n t u r n . To t a l n u m b e r o f b u s i n e s s li c e n s e s N Fr o m 2 0 1 3 - 2 0 1 5 , b u s i n e s s l i c e n s e s h a v e i n c r e a s e d o n a v e r a g e 1 6 % y e a r - o n - y e a r . S p e c i a l e v e n t l i c e n s e s m ak e u p 6 % of t h e t o t a l b u s i n e s s l i c e n s e s p e r y e a r . F r o m 2 0 1 3 - 20 1 6 , c o n t r a c t o r l i c e n s e s a c c o u n t f o r 2 0 % o f n e w l i ce n s e s . Se a s o n a l b u s i n e s s s a l e s a c t i v i t y N Of f - s e a s o n s a l e s m o n t h s ( A p r i l , M a y , O c t o b e r , N o v e m be r ) d i f f e r c o n s i d e r a b l y f r o m o n - s e a s o n m o n t h s ( J a n ua r y , Fe b r u a r y , J u l y , A u g u s t , D e c e m b e r ) ( i n f l a t i o n a d j u s t ed t o 2 0 1 5 d o l l a r s ) . O n t h e w h o l e , b o t h o n a n d o f f - se a s o n s a l e s ac t i v i t y s h o w s a n i n c r e a s e a t a n a v e r a g e r a t e o f 6 . 9% o v e r t h e 2 0 1 2 - 2 0 1 5 p e r i o d . Mi x o f t o p b u s i n e s s t y p e s N In d u s t r y s a l e s w e r e r e l a t i v e l y c o n s i s t e n t b e t w e e n 2 01 0 - 2 0 1 2 a n d 2 0 1 3 - 2 0 1 5 ( i n f l a t i o n a d j u s t e d t o 2 0 1 5 do l l a r s ) . Ac c o m m o d a t i o n s r e f l e c t s a n e x c e p t i o n ; t o t a l s a l e s i nc r e a s e d a n a v e r a g e o f 1 0 . 2 % y e a r - o n - y e a r f r o m 2 0 1 3 -2 0 1 5 co m p a r e d t o t h e 3 . 8 % c h a n g e y e a r - o n - y e a r f r o m 2 0 1 0 - 20 1 2 . Co m m e r c i a l v a c a n c y r a t e s N Da t a f o r t h i s m e a s u r e w a s n o t p r e s e n t e d i n t h i s r e p or t . M e a s u r e m a y b e p u r s u e d i n a f u t u r e i t e r a t i o n o f t h e r e p o r t . Co m m e r c i a l r e n t a l r a t e s N Da t a f o r t h i s m e a s u r e w a s n o t p r e s e n t e d i n t h i s r e p or t . M e a s u r e m a y b e p u r s u e d i n a f u t u r e i t e r a t i o n o f t h e r e p o r t . TA R G E T S T A T U S K E Y GR E E N ME E T I N G O R E X C E E D I N G YE L L O W NO T M E E T I N G ; W I T H I N R A N G E RE D NO T M E E T I N G GR A Y NO T A R G E T S E T P22 II. 22 EC O N O M I C S U S T A I N A B I L I T Y D A S H B O A R D : S U M M A R Y O F F I N D I NG S Pe r f o r m a n c e M e a s u r e T a r g e t S e t C u r r e n t S t a t u s WO R K F O R C E S U P P L Y & M A T C H Si z e o f v a l l e y w o r k f o r c e / t o p oc c u p a t i o n s N In 2 0 0 8 t h e w o r k f o r c e s i z e w a s a p p r o x i m a t e l y 3 7 , 0 0 0 . I t h a s s i n c e d r o p p e d t o 3 3 , 0 0 0 ( 2 0 1 4 ) . T h e c o m p o s it i o n o f th e w o r k f o r c e h a s r e m a i n e d r e l a t i v e l y s t a b l e o v e r t he y e a r s w i t h Ar t s , E n t e r t a i n m e n t , R e c r e a t i o n , Ac c o m m o d a t i o n , a n d F o o d c o n s i s t e n t l y co n s i s t e n t l y a s t h e t o p o c c u p a t i o n a r e a . An n u a l e m p l o y e e w a g e s i n co m p a r i s o n w i t h o t h e r C o l o r a d o (p e e r ) r e s o r t c o u n t i e s . N In 2 0 1 5 , P i t k i n C o u n t y ( A s p e n / S n o w m a s s ) h a d t h e h i g he s t a n n u a l w a g e s ( a s c o m p a r e d t o p e e r c o u n t i e s ) r e po r t e d a t $5 9 , 4 8 8 . P i t k i n C o u n t y a n n u a l a v e r a g e w a g e i n c r e a s e d b y a p p ro x i m a t e l y 2 9 % f r o m 2 0 1 1 t o 2 0 1 5 w h i c h i s li k e l y a t t r i b u t e d t o a r e b o u n d i n h i r i n g a n d w a g e s po s t t h e e c o n o m i c d o w n t u r n i n 2 0 0 8 / 2 0 0 9 . % o f h o u s e h o l d s w h o a r e ho u s i n g c o s t b u r d e n e d N 90 % ( o w n e r s ) a n d 7 0 % ( r e n t e r s ) o f A P C H A e m p l o y e d h o us e h o l d s a r e no t c o s t b u r d e n e d w i t h c o s t s b e l o w 3 0 % o f ho u s e h o l d i n c o m e s . F o r P i t k i n C o u n t y e m p l o y e d h o u s e ho l d s , 8 1 % ( o w n e r s ) a n d 7 0 % ( r e n t e r s ) a r e no t co s t bu r d e n e d w i t h c o s t s 3 0 % b e l o w h o u s e h o l d i n c o m e s . % o f C o A w o r k f o r c e t h a t r e s i d e s wi t h i n t h e A s p e n u r b a n g r o w t h bo u n d a r y N Th e t o t a l n u m b e r o f A s p e n w o r k f o r c e m e m b e r s l i v i n g wi t h i n t h e U r b a n G r o w t h B o u n d a r y ( U G B ) i s n o t r e a d i ly av a i l a b l e . A s a r e l a t i v e p r o x y , 3 8 % o f C i t y o f A s p e n F T E w o r k f o r c e l i v e w i t h i n t h e U G B . [ N o t e : T h i s m e as u r e h a s b e e n re s e r v e d f o r f u r t h e r r e s e a r c h a n d d e v e l o p m e n t ] Me d i a n c o m m u t i n g c o s t s b y b u s (a s a % o f m e d i a n H H i n c o m e ) N Th e a v e r a g e w o r k f o r c e m e m b e r ( t r a v e l l i n g f r o m m i d v al l e y ) s p e n d s a p p r o x i m a t e l y $ 2 , 1 0 0 o r ( 3 . 5 % ) o f a n n ua l w a g e s co m m u t i n g b y b u s . T h e a n n u a l r o u n d t r i p c o s t o f c o m mu t i n g b y b u s i s c a l c u l a t e d a t a p p r o x i m a t e l y o n e f i ft h ( 2 0 % ) of w h a t i t c o s t s f o r d r i v e a l o n e c o m m u t e f o r t h e s a me d i s t a n c e ( A s p e n / C a r b o n d a l e ) . [ N o t e : R F T A r e c o m m e nd s us i n g t h e f l a t r o u n d t r i p r a t e f a r e d i s c o u n t e d a t 3 0% t o a c c o u n t f o r t h e v a l u e c a r d . ] Pa r t i c i p a t i o n r a t e o f em p l o y e r s / e m p l o y e e s i n su b s i d i z e d / f r e e b u s p a s s pr o g r a m s N Su b s i d i z e d / f r e e b u s p a s s e s t o t a l i n g 1 , 1 8 5 ( 6 2 7 - wi n t e r a n d 5 5 8 – s u m m e r ) a r e p u r c h a s e d b y a p p r o x i m a te l y 5 0 em p l o y e r s f o r t h e b e n e f i t o f t h e i r e m p l o y e e s . TA R G E T ST A T U S K E Y GR E E N ME E T I N G O R E X C E E D I N G YE L L O W NO T M E E T I N G ; W I T H I N R A N G E RE D NO T M E E T I N G GR A Y NO T A R G E T S E T P23 II. 23 EC O N O M I C S U S T A I N A B I L I T Y D A S H B O A R D : S U M M A R Y O F F I N D I NG S Pe r f o r m a n c e M e a s u r e T a r g e t S e t C u r r e n t S t a t u s LO C A L C O M M U N I T Y V I A B I L I T Y Me d i a n h o u s e h o l d i n c o m e N Fr o m 2 0 0 9 -20 1 4 , A s p e n a n d P i t k i n C o u n t y m e d i a n h o u s e h o l d i n c o m es h a v e v a r i e d , w i t h a n a v e r a g e pe r i o d c h a n g e o f 3 . 6 % a n d 2 . 7 % , r e s p e c t i v e l y . B o t h c om m u n i t i e s a r e c o n s i s t e n t l y a b o v e t h e s t a t e f i g u r e s (g r e w 1 . 3 % o n a v e r a g e y e a r - o n - y e a r ) . Un e m p l o y m e n t r a t e N Fr o m 2 0 0 9 -20 1 4 , t h e A s p e n u n e m p l o y m e n t r a t e g r e w . 9 % a n d t h e V al l e y r a t e i n c r e a s e d 1 % y e a r -on -ye a r . Th e n a t i o n a l r a t e h a s d e c r e a s e d r o u g h l y . 6 % y e a r - o n -y e a r . Af f o r d a b l e o w n e r s h i p ho u s i n g s u p p l y & d e m a n d N Th e m a j o r i t y o f A P C H A o w n e r s h i p i n v e n t o r y i s c o m p r i se d o f C a t e g o r y 4 a n d R O u n i t s ( 3 3 % e a c h ) . F r o m 20 0 5 - 2 0 1 5 , t h e m o s t a v e r a g e d b i d s p e r u n i t a r e i n C at e g o r y 1 a n d 2 . S i n c e 2 0 0 5 , a v e r a g e u n i t b i d s h a v e de c r e a s e d b y 3 8 % . Af f o r d a b l e r e n t a l h o u s i n g su p p l y & d e m a n d N Th e m a j o r i t y o f A P C H A r e n t a l i n v e n t o r y i s c o m p r i s e d o f C a t e g o r y 3 ( 3 2 % ) a n d R O u n i t s ( 3 5 % ) . F r o m 2 0 1 4 to 2 0 1 5 , a v e r a g e a p p l i c a t i o n s p e r u n i t i n c r e a s e d a t 3 7 % ( C a t e g o r y 1 - 2 ) , 6 7 % ( C a t e g o r y 3 - 4 ) , a n d 2 . 4 % (C a t e g o r y R O ) . Li c e n s e d c h i l d c a r e c a p a c i t y fo r c h i l d r e n u n d e r 5 N Fr o m 2 0 1 0 t o 2 0 1 4 , P i t k i n C o u n t y c h i l d c a r e c a p a c i t y fu l f i l l e d n e a r l y h a l f o f t h e p o t e n t i a l n e e d o n a v e r ag e . Of s u r v e y r e s p o n d e n t s , 4 8 % a r e c u r r e n t l y s e r v e d b y c hi l d c a r e i n l i c e n s e d c e n t e r s . R o u g h l y 6 5 % o f s u r v e y re s p o n d e n t s p r e f e r c h i l d c a r e i n l i c e n s e d c e n t e r s . Li c e n s e d c h i l d c a r e c o s t N Fr o m 2 0 1 0 -20 1 5 , d a i l y c h i l d c a r e r a t e s s h o w a n i n c r e a s e o f 3 % o n a v e r a g e e a c h y e a r . T h e a v e r a g e a n n u a l in f a n t c h i l d c a r e r a t e i n P i t k i n C o u n t y i s 3 3 % m o r e co s t l y t h a n t h e s t a t e a v e r a g e . Co s t o f h e a l t h i n s u r a n c e N Th e a v e r a g e c o s t o f h e a l t h i n s u r a n c e p r e m i u m s t o A s pe n e m p l o y e e s i s $ 1 1 9 . 9 3 p e r m e m b e r p e r m o n t h (p m p m ) , a s r e p r e s e n t e d b y V H A d a t a . O n a v e r a g e , e m p l o ye e s p a y 1 7 . 5 % o f h e a l t h p r e m i u m c o s t s (p m p m ) . T h i s p e r c e n t a g e s p l i t i s c o m p a r a b l e t o t h e st a t e ’ s a v e r a g e o f 1 6 % . Hi g h s c h o o l g r a d u a t i o n r a t e N Fr o m 2 0 1 0 t o 2 0 1 5 , t h e A s p e n H i g h S c h o o l g r a d u a t i o n ra t e i s c o n s i s t e n t l y a b o v e 9 0 % . O n a v e r a g e , t h e gr a d u a t i o n r a t e i s 9 5 . 6 % a n d t h e c o m p l e t i o n r a t e i s 9 7 . 2 % . Vo t e r p a r t i c i p a t i o n n u m b e r s N Fr o m 2 0 0 5 -20 1 5 , A s p e n ’ s n u m b e r o f v o t e r s a v e r a g e a r o u n d 2 , 2 5 2 w hi l e r u n o f f e l e c t i o n v o t e s a v e r a g e a t 1, 7 1 6 . F r o m 2 0 0 8 - 2 0 1 5 , t h e a v e r a g e P i t k i n C o u n t y v o t er p a r t i c i p a t i o n i s 6 , 7 4 7 , w i t h h i g h e r r a t e s d u r i n g na t i o n a l e l e c t i o n y e a r s . TA R G E T S T A T U S K E Y GR E E N ME E T I N G O R E X C E E D I N G YE L L O W NO T M E E T I N G ; W I T H I N R A N G E RE D NO T M E E T I N G GR A Y NO T A R G E T S E T P24 II. 24 AT T A C H M E N T B : C O M P L E T E S U S T A I N A B I L I T Y R E P O R T Pl e a s e c l i c k o n t h e i c o n b e l o w t o o p e n t h e f u l l S u s ta i n a b i l i t y R e p o r t Ad o b e A c r o b a t Do c u m e n t P25 II. Page 1 of 3 MEMORANDUM TO: Mayor and City Council FROM: Don Taylor, Director of Finance THRU: Steve Barwick, City Manager DATE OF MEMO: July 22, 2016 MEETING DATE: July 26, 2016 RE: Discussion on the structure of Aspen Country Inn (ACI) Refinancing REQUEST OF COUNCIL: This is being provided to City Council in advance of its scheduled consideration at the regular council meeting on August 8th 2016. PREVIOUS COUNCIL ACTION: City Council agreed to make a loan in the amount of $1,691,130 in 2000 in order to provide a layer of the financing required for this project. Interest has not been paid on the note so the balance is now $3.28 million. BACKGROUND: The city and APCHA worked together to create the Aspen Country Inn (ACI) as an affordable housing project in 2000. APCHA created an LLC and partnered with private equity investors that infused cash into the partnership in exchange for rights to depreciation, tax credits and profits or losses. The city put the land into the project and took a promissory note and deed of trust for the value of the land. At the end of the tax credit compliance period (15 years) APCHA bought out the interest of the private equity investors. The City and APCHA have been working together to try and refinance the property and re- syndicate tax credits in order to lower interest costs and finance major repairs that need to happen at ACI. Some of the repairs were discovered as part of the capital needs assessment that was performed as part of the financing requirements. The cost of these repairs are estimated to be 5.7 million dollars. The largest component of this cost is replacing the roof which is seriously damaged. There is also radon mitigation, storm water management, HVAC, some siding replacement and appliance replacement components to this project. Most of this is required by either HUD or tax credit investors as a condition of their investment. The Asset department should have a good estimate of the project cost by the meeting date. DISCUSSION: There has been some minor modifications to the form of the financing for ACI that reduce the cost of borrowing. The basic structure of the financing is as follows: P26 III. Page 2 of 3 The City and APCHA will form a new partnership entity. The City will be the managing general partner with a less than 1% interest. Private equity partners will be given a 99%+ interest in exchange for buying tax credits that the project will be eligible for. This will raise approximately $5,380,000 toward completion of the project and cost of the tax credit deal. Colorado Housing Authority will issue a tax exempt bond for the construction financing of the project that will not exceed $7,200,000. The tax exempt financing component of the initial construction financing makes the project eligible for Low Income Housing Tax Credits (LIHTC). These funds will be loaned to the new ACI partnership to accomplish the construction work and to pay off the existing mortgages. A copy of this financing agreement is attached. The City will buy the Bond issued by CHFA as an investment as part of its investment portfolio. This will be a private placement by CHFA. This eliminates the need for disclosure counsel and eliminates marketing costs, saving the project approximately $50,000. This bond will have a less than one-year term. The permanent financing will be put in place upon the completion of the project through a HUD guaranteed loan. While the city tax exempt bond will be paid off it will be necessary for the city to take back a promissory note and deed of trust as a soft loan in the amount of $5,688,000 as part of the permanent financing. There is a developer fee that the city will be paid as part of the transaction that it could use to adjust this amount down or the city can take the developer fee out and use it for housing development. The developer fee amount to the City is currently estimated to be $1,200,000. Currently the plan is to take the developer fee out and use it in the housing development fund. The City currently has a similar loan as part of the existing financing in the amount of $3,350,000. FINANCIAL/BUDGET IMPACTS: The financing project has been structured so that the rents from the project can support the ongoing operational costs and the primary debt financing costs. There may be some payment of interest to the city on its subordinate loan but no real amortization of the loan. In year 15 of the partnership agreement the City will have the option to buy out the tax credit partners for essentially their tax costs as there will be no real equity in the property. RECOMMENDED ACTION: Staff recommends approval of this financial structure. ALTERNATIVES: The City could choose not to do this work at this time and not refinance the property. PROPOSED MOTION CITY MANAGER COMMENTS: ATTACHMENTS: CHFA Financing Agreement P27 III. Page 3 of 3 Letter of Intent from Boston Capital (Tax Credit Partner) Agreement of Limited Partnership P28 III. DRAFT SHERMAN & HOWARD L.L.C. JULY 18, 2016 FINANCING AGREEMENT By and Among COLORADO HOUSING AND FINANCE AUTHORITY CITY OF ASPEN, COLORADO and ACI AFFORDABLE 1 LLLP, a Colorado limited liability limited partnership Dated as of July __, 2016 Relating to Colorado Housing and Finance Authority Multifamily Housing Revenue Bond (Aspen Country Inn Project) Series 2016 P29 III. i TABLE OF CONTENTS (THIS TABLE OF CONTENTS IS NOT A PART OF THIS FINANCING AGREEMENT, BUT IS ONLY FOR CONVENIENCE OF REFERENCE.) Page ARTICLE I DEFINITIONS AND INTERPRETATION ............................................................... 2 Section 1.1 Definitions........................................................................................................... 2 Section 1.2 Interpretation. ...................................................................................................... 5 Section 1.3 Recitals, Titles and Headings. ............................................................................. 5 Section 1.4 Exhibits. .............................................................................................................. 5 ARTICLE II REPRESENTATIONS AND WARRANTIES ......................................................... 6 Section 2.1 Representations and Warranties of the Authority. .............................................. 6 Section 2.2 Representations, Warranties and Covenants of the Borrower. ........................... 7 Section 2.3 Representations and Warranties of the Lender. .................................................. 9 ARTICLE III ISSUANCE OF THE BOND ................................................................................. 10 Section 3.1 Issuance and Sale of the Bond. ......................................................................... 10 Section 3.2 Delivery of the Bond and Closing of the Loan. ................................................ 10 Section 3.3 Terms of the Bond. ........................................................................................... 11 Section 3.4 Redemption of the Bond. .................................................................................. 11 Section 3.5 Registration and Transfer. ................................................................................. 12 Section 3.6 Limitation on Liability of Authority. ................................................................ 13 Section 3.7 No Warranty...................................................................................................... 14 Section 3.8 Supplemental Public Securities Act Provisions. ............................................... 14 ARTICLE IV THE LOAN ........................................................................................................... 15 Section 4.1 Amount, Source and Funding of Loan. ............................................................. 15 Section 4.2 Loan Repayment. .............................................................................................. 15 Section 4.3 Additional Payments. ........................................................................................ 16 Section 4.4 Nature of the Borrower’s Obligations............................................................... 16 Section 4.5 Prepayment of Note. ......................................................................................... 17 Section 4.6 Servicing Requirements. ................................................................................... 17 Section 4.7 Rights Under Loan Agreement. ........................................................................ 18 Section 4.8 Rights Under Security. ...................................................................................... 18 Section 4.9 Insurance and Condemnation Proceeds. ........................................................... 18 ARTICLE V FURTHER AGREEMENTS ................................................................................... 19 Section 5.1 Covenants of the Authority. .............................................................................. 19 Section 5.2 Borrower to Maintain its Existence; Conditions Under Which Exceptions Permitted. .......................................................................................................... 19 Section 5.3 Sale or Conveyance of the Facilities. ................................................................ 20 Section 5.4 Tax-Exempt Status of Bond; Arbitrage. ........................................................... 21 Section 5.5 Additional Instruments...................................................................................... 22 Section 5.6 Books and Records. .......................................................................................... 23 Section 5.7 Notice of Certain Events. .................................................................................. 23 Section 5.8 Indemnification of the Authority and the Lender. ............................................ 23 Section 5.9 Compliance with Usury Laws. .......................................................................... 24 Section 5.10 Compliance with Other Laws. .......................................................................... 24 P30 III. ii Section 5.11 Maintenance and Repair of Facilities. .............................................................. 24 Section 5.12 Additional Covenants Required by the Lender. ................................................ 24 ARTICLE VI EVENTS OF DEFAULT AND REMEDIES ........................................................ 26 Section 6.1 Defaults. ............................................................................................................ 26 Section 6.2 Loan Acceleration Default. ............................................................................... 27 Section 6.3 Remedies. .......................................................................................................... 27 Section 6.4 Attorneys’ Fees and Costs. ............................................................................... 28 Section 6.5 No Remedy Exclusive....................................................................................... 28 Section 6.6 No Additional Waiver Implied by One Waiver. ............................................... 28 ARTICLE VII MISCELLANEOUS ............................................................................................. 29 Section 7.1 Entire Agreement. ............................................................................................. 29 Section 7.2 Notices. ............................................................................................................. 29 Section 7.3 Assignments. ..................................................................................................... 30 Section 7.4 Waiver of Jury Trial. ......................................................................................... 30 Section 7.5 Severability. ...................................................................................................... 31 Section 7.6 Execution of Counterparts. ............................................................................... 31 Section 7.7 Amendments, Changes and Modifications. ...................................................... 31 Section 7.8 Governing Law. ................................................................................................ 31 Section 7.9 Term of Agreement. .......................................................................................... 31 Section 7.10 Non-Business Days. .......................................................................................... 31 Section 7.11 Parties to Act Reasonably. ................................................................................ 31 Section 7.12 No Violations of Law........................................................................................ 32 Section 7.13 Agreement of the State...................................................................................... 32 Exhibit A – Form of Bond A-1 Exhibit B – Investor Letter B-1 P31 III. FINANCING AGREEMENT THIS FINANCING AGREEMENT (this “Agreement”), dated as of July __, 2016, is by and among the COLORADO HOUSING AND FINANCE AUTHORITY (the “Authority”), a body corporate and political subdivision of the State of Colorado, the CITY OF ASPEN, COLORADO, a home rule municipality of the State of Colorado (the “Lender”), as the registered owner and servicer or any successor in interest, and ACI AFFORDABLE 1 LLLP, a Colorado limited liability limited partnership (the “Borrower”). W I T N E S S E T H: WHEREAS, the Colorado Housing and Finance Authority Act, being part 7 of article 4 of title 29, Colorado Revised Statutes (the “Act”), authorizes the Authority to issue bonds and other obligations to finance the cost of the provision of decent, safe and sanitary dwelling accommodations constituting “Housing Facilities” (as such term is defined in the Act); and WHEREAS, the Authority, the Lender and the Borrower each have full power and authority to enter into this Agreement; and WHEREAS, pursuant to an authorizing resolution, the Authority has authorized the issuance of its Multifamily Housing Revenue Bond (Aspen Country Inn Project) Series 2016 in the maximum principal amount of $7,600,000 (the “Bond”), the proceeds of which are to be used to fund a loan to the Borrower in the maximum principal amount of $7,600,000 (the “Loan”) in order to finance a portion of the costs of the rehabilitation and equipping by the Borrower of a 40-unit multifamily housing facility known as Aspen Country Inn, located at 38996 Highway 82, in Aspen, Colorado (the “Project”); and WHEREAS, the Borrower desires to borrow funds to finance the Project upon the terms and conditions in this Agreement set forth below. WHEREAS, the Lender has agreed to purchase and to pay the purchase price of such Bond pursuant to and in accordance with this Agreement; and WHEREAS, the payment of the Bond will be secured by an assignment primarily for security purposes of the Note evidencing the Loan and First Deed of Trust and Security Agreement by the Borrower in favor of the Authority; WHEREAS, the parties hereto desire to confirm the underlying financial transactions between the Lender and the Borrower, and in particular that in the event of a default under the Loan, the Bond would be accelerated and the Loan and the Security pledged thereto would be transferred to the Lender, as registered owner of the Bond, in full satisfaction of the Bond; and NOW, THEREFORE, for and in consideration of the premises and the mutual covenants herein contained, the parties hereto formally covenant, agree and bind themselves as follows: P32 III. 2 ARTICLE I DEFINITIONS AND INTERPRETATION Section 1.1 Definitions. Capitalized words and terms as used in this Agreement shall have the following meanings, unless the context or use otherwise requires: “Act” means the Colorado Housing and Finance Authority Act, being Part 7, Article 4, Title 29 of Colorado Revised Statutes, as now in effect and as it may from time to time hereafter be amended and supplemented. “Act of Bankruptcy of the Borrower” means the filing of a petition in bankruptcy (or other commencement of a bankruptcy or similar proceeding) by or against the Borrower, under any applicable bankruptcy, insolvency or similar law now or hereafter in effect which has not been dismissed within sixty (60) days of such filing. “Agreement” means this Financing Agreement dated as of July __, 2016 by and among the Authority, the Lender and the Borrower, as amended and supplemented from time to time. “Assignment of Security” means the assignment by the Authority of the Security (except for the Unassigned Issuer’s Rights) to the Lender, as registered owner of the Bond pursuant to the Assignment of Loan Documents dated the Closing Date from the Authority to and for the benefit of the Lender. “Authority” means the Colorado Housing and Finance Authority, the body corporate and political subdivision of the State created pursuant to the Act, or any successor thereto under or with respect to the Act. “Bond” means the Authority’s Multifamily Housing Revenue Bond (Aspen Country Inn Project) Series 2016 in the maximum Principal Amount of $7,600,000. “Bond Counsel” means an attorney at law or a firm of attorneys, designated by the Authority, of nationally recognized standing in matters pertaining to the tax status of interest on bonds issued by states and their political subdivisions, duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia. “Borrower” means ACI Affordable 1 LLLP, a Colorado limited liability limited partnership, and its successors and assigns. “Borrower Representative” means the person or persons at the time designated by the Borrower to act on behalf of the Borrower by written certificate furnished to the Authority and the Lender containing the specimen signatures of such person or persons and signed on behalf of the Borrower by one of the Borrower’s officers. Such certificate may designate an alternate or alternates. P33 III. 3 “Business Day” means a day other than a Saturday, a Sunday or a day on which banks in Colorado are authorized or required by law or executive order to remain closed. “Closing Date” means July __, 2016, being the date of initial issuance and delivery of the Bond. “Code” means the Internal Revenue Code of 1986, as amended to the Closing Date, and the Regulations thereunder or any successor to the Internal Revenue Code of 1986. Reference to any particular Code section shall, in the event of such successor Code, be deemed to be reference to the successor to such Code section. “Default” means any occurrence described in Section 6.1 hereof. “Determination of Taxability” means (a) the occurrence of any action that, in the judgment of the Lender, in reliance on the advice of Bond Counsel, will adversely affect the tax- exempt status of the Bond, (b) the failure to take any action that, in the judgment of the Lender, in reliance on the advice of Bond Counsel, is necessary to preserve the exemption from income taxation of interest on the Bond, (c) a final judgment or order of a court of competent jurisdiction, or a final ruling or decision of the Internal Revenue Service, in any such case to the effect that the interest on the Bond is includable for Federal income tax purposes in the gross incomes of the recipients thereof, or (d) the enactment of Federal legislation that would cause the interest on the Bond to be includable for Federal income tax purposes in the gross incomes of the recipients thereof. A judgment or order of a court of competent jurisdiction or a ruling or decision of the Internal Revenue Service shall be considered final only if no appeal or action for judicial review has been filed (and is pending) and the time for filing such appeal or action has expired. “Environmental Indemnity Agreement” means the Environmental Indemnity Agreement dated as of the Closing Date, executed by the Borrower in favor of the Authority and the Lender. “Facilities” means the multifamily housing project consisting of a 40 rental housing units located at 38996 Highway 82, in Aspen, Colorado. “Interest Payment Date” means (a) the first (1st) day of each month, commencing on [September] 1, 2016, (b) any other date on which principal of and interest on the Bond is due and payable, whether at maturity, prior redemption, acceleration or otherwise, or (c) any other date on which principal of and interest on the Note is due and payable, whether at maturity, prepayment, acceleration or otherwise. “Interest Rate” means the _____________ percent (____%) per annum. “Loan” means the secured loan originated by the Authority, as secured lender, to the Borrower and assigned to the Lender pursuant to the Assignment of Security, maturing on [August 1, 2017] in the maximum Principal Amount of $7,600,000 plus interest at the Interest Rate, for the purpose of rehabilitating and/or equipping the Project, which will be made in accordance with the terms of the Loan Agreement. “Loan Acceleration Default” means any occurrence described in Section 6.2 hereof. P34 III. 4 “Loan Agreement” means the Loan Agreement dated as of the Closing Date between the Lender and the Borrower, as the same may from time to time be amended or supplemented as provided therein. “Loan Documents” means this Agreement, the Tax Certificate, the Regulatory Agreement, the Note, the Loan Agreement, the Security and the Environmental Indemnity Agreement. “Note” means the Promissory Note executed by the Borrower to evidence the Loan. “Outstanding” means, when used as of any particular time with reference to the Bond, the initial Principal Amount of the Bond plus the principal amount of each draw delivered pursuant to Section 3.3 hereof, less any payments of such principal previously received by the Lender. “Person,” unless the context requires, includes any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust company, trust, unincorporated organization or government or agency or political subdivision thereof. “Principal Amount” means $7,600,000, the maximum principal amount of the Bond and the Loan. “Project” means the financing of the Facilities. “Rebate Amount” means the amount, if any, determined to be payable with respect to the Bond by the Borrower to the United States of America in accordance with Section 5.4 hereof and Section 148(f) of the Code. “Regulatory Agreement” means the Regulatory Agreement and Declaration of Restrictive Covenants dated the Closing Date between the Authority and the Borrower required to be executed, delivered and recorded with respect to the Project, as the same may be amended from time to time in accordance with the provisions thereof. “Revenues” means all moneys paid or payable to the Authority in respect of payments or prepayments of principal of and interest on the Note, and all receipts of the Lender, including but not limited to payment and prepayments of the Note, proceeds of insurance or condemnation awards that are not used to repair or replace the Facilities and proceeds of Transfers pursuant to Section 5.3(b) hereof, which reduce the principal balance of the Note. “Security” means First Deed of Trust and Security Agreement dated the Closing Date, by the Borrower in favor of the Authority. “State” means the State of Colorado. “Supplemental Act” means the Supplemental Public Securities Act, being Part 2 of Article 57 of Title 11, Colorado Revised Statutes. “Tax Certificate” means, together, the Authority’s and the Borrower’s respective Federal Tax Exemption Certificates, each dated as of the Closing Date. P35 III. 5 “Tax Credit Regulatory Agreement” means the Low Income Housing Tax Credit Extended Use Agreement with respect to the allocation of Federal low income housing tax credits available to the Project. “Transfer” means the sale, transfer, lease, encumbrance or other conveyance of title to ownership of or an interest in the Facilities or any portion thereof, including to a “related person” pursuant to the provisions of Section 267 or 707(b) or under Section 1563(a) of the Code. “Transferee” means the Person to whom the Borrower Transfers the Facilities or any portion thereof. “Unassigned Issuer’s Rights” means any and all of the rights of the Authority under this Agreement, the Note, the Security and the other Loan Documents to receive payments, fees and expenses, to be held harmless and indemnified, to be an insured under any insurance policy pursuant to any Loan Document, to be reimbursed for attorney’s fees and expenses, to receive notices and to give or withhold consent to amendments, changes, modifications, alterations and termination of such Loan Documents. Section 1.2 Interpretation. Unless the context clearly requires otherwise, words of masculine gender shall be construed to include correlative words of the feminine and neuter genders and vice versa, and words of the singular number shall be construed to include correlative words of the plural number and vice versa. Any reference herein to the Authority or to any officer, employee or official thereof includes entities, officers, employees or officials succeeding to their respective functions, duties or responsibilities pursuant to or by operation of law or who are lawfully performing their functions. This Agreement and all the terms and provisions hereof shall be construed to effectuate the purpose set forth herein and to sustain the validity hereof. Section 1.3 Recitals, Titles and Headings. The terms and phrases used in the recitals of this Agreement have been included for convenience of reference only, and the meaning, construction and interpretation of all such terms and phrases for purposes of this Agreement shall be determined by references to Section 1.1. hereof. The titles and headings of the articles and sections of this Agreement have been inserted for convenience of reference only and are not to be considered a part hereof, and shall not in any way modify or restrict any of the terms or provisions hereof and shall never be considered or given any effect, in construing this Agreement or any provision hereof or in ascertaining intent, if any question of intent should arise. Section 1.4 Exhibits. All exhibits to this Agreement, including but not limited to any additional terms or provisions contained therein, are hereby incorporated into this Agreement. In the event of any conflict between the provisions of Article I through VII hereof and of said exhibits, the terms and provisions of said exhibits shall control. (End of Article I) P36 III. 6 ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1 Representations and Warranties of the Authority. The Authority represents and warrants as follows: (a) The Authority is a body corporate and political subdivision of the State, established and acting pursuant to the Act. (b) The Authority has lawful power and authority under the laws of the State, including, without limitation, the Act and the Supplemental Act, acting through its Board of Directors, to enter into the transactions contemplated by this Agreement and to carry out its obligations hereunder, including but not limited to lending the proceeds of the sale of the Bond to the Borrower to finance the Project, and to enter into and perform its obligations under this Agreement, the Bond and the Assignment of Security. (c) To the Authority’s knowledge, no member of the Board of Directors of the Authority or any other officer of the Authority has any significant or conflicting interest, financial, employment or otherwise, in the Borrower, the Project or the transactions described herein. (d) The Authority has duly authorized the execution and delivery of this Agreement, the Bond, the Assignment of Security and the Regulatory Agreement, has duly executed and delivered this Agreement, the Bond, the Assignment of Security and the Regulatory Agreement, and, assuming due authorization, execution and delivery by the other parties thereto, this Agreement, the Bond, the Assignment of Security and the Regulatory Agreement are the valid, legal and binding obligations of the Authority enforceable in accordance with their respective terms except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws of general applicability affecting the enforcement of creditors’ rights and to general principles of equity and judicial discretion. (e) To the Authority’s knowledge, the performance and the consummation of the transactions on the part of the Authority contemplated in this Agreement and the compliance by the Authority with the terms, conditions and provisions of this Agreement, the Bond, the Assignment of Security and the Regulatory Agreement do not conflict with, or constitute on the part of the Authority a violation of, breach of or default under (i) the Act; (ii) any order, rule or regulation applicable to the Authority; (iii) any agreement or instrument to which the Authority is a party or by which the Authority is bound; or (iv) any court order or consent decree to which the Authority is subject. (f) No litigation at law or in equity or administrative action of any nature has been served on the Authority and is now pending materially adversely affecting (i) the creation, organization or existence of the Authority; (ii) the authority of the Authority to accept or perform the duties and obligations of the Authority under this Agreement, the P37 III. 7 Bond, the Assignment of Security and the Regulatory Agreement; or (iii) the Authority’s ability to fulfill its duties and obligations under this Agreement, the Bond, the Assignment of Security and the Regulatory Agreement. (g) The Authority makes no other representations, either expressly or impliedly, as to the Project or the financing thereof. THE AUTHORITY MAKES NO WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROJECT OR ANY PORTION THEREOF, INCLUDING, WITHOUT LIMITATION, THE HABITABILITY THEREOF; THE MERCHANTABILITY OR FITNESS OR SUITABILITY THEREOF FOR ANY PARTICULAR PURPOSES; THE DESIGN OR CONDITION THEREOF; THE WORKMANSHIP, QUALITY OR CAPACITY THEREOF; LATENT DEFECTS THEREIN; OR THE COMPLIANCE THEREOF WITH ANY LEGAL REQUIREMENTS. Section 2.2 Representations, Warranties and Covenants of the Borrower. The Borrower represents, as of the date hereof and as of the date of each request for disbursement, and warrants and covenants that: (a) The Borrower is a limited liability limited partnership and is qualified to transact business in the State. (b) The Loan Documents to which the Borrower is a party have been duly executed and delivered by the Borrower and, when executed by all applicable parties, will constitute the legal, valid and binding obligation of the Borrower, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws or judicial decisions affecting the rights of creditors generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (c) The Borrower has duly authorized as necessary (i) the execution and delivery of the Loan Documents to which the Borrower is a party, (ii) the performance by the Borrower of its obligations hereunder and thereunder, and (iii) the consummation of the transactions contemplated by the Loan Documents to which the Borrower is a party. (d) The execution and delivery of the Loan Documents to which the Borrower is a party, the performance by the Borrower of its obligations hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby (i) to the Borrower’s knowledge, do not and will not violate any law, regulation, rule or ordinance or any order, judgment or decree of any Federal, state or local court applicable to the Borrower, (ii) do not and will not conflict with or constitute a breach of, or a default under, the Borrower’s organizational documents, and (iii) do not and will not conflict with or constitute a breach of, or a material default under, any document, instrument or commitment to which the Borrower is a party or by which the Borrower or any of its property is bound. (e) There is no action, suit, proceeding, inquiry or investigation by or before any court, governmental agency or public board or body pending against the Borrower or, to the Borrower’s knowledge, threatened against the Borrower (nor, to the Borrower’s knowledge, is P38 III. 8 there any basis therefor) which (i) affects or seeks to prohibit, restrain or enjoin the execution and delivery of the Loan Documents to which the Borrower is a party, (ii) affects or questions the validity or enforceability of the Loan Documents to which the Borrower is a party or (iii) questions the power or authority of the Borrower to carry out the transactions contemplated by, or to perform its obligations contemplated by, or to perform its obligations under the Loan Documents to which the Borrower is a party, or the powers of the Borrower to own, rehabilitate equip, develop and/or operate the Facilities or to finance the Facilities. (f) The Borrower is not in default under any document, instrument or commitment to which the Borrower is a party or to which it or any of its property is subject which default would or could materially and adversely affect the ability of the Borrower to carry out its obligations under the Loan Documents. (g) Neither the Loan Documents nor any document, certificate or written statement (including but not limited to information with respect to the Facilities or the financing thereof, but excluding any projections, opinions and forward looking statements), when taken as whole, prepared and furnished to the Lender, the Authority or Bond Counsel by or on behalf of the Borrower, contains any untrue statement of a material fact by Borrower or omits to state a material fact with respect to the Borrower or the Project necessary in order to make the statements contained herein and therein, in light of the circumstances under which they were made, not misleading as of the date hereof and as of the Closing Date. It is specifically understood by the Borrower that all such statements, representations and warranties shall be deemed to have been relied upon by the Authority and the Lender as an inducement to effectuate the Loan, and that if any such statements, representations and warranties were materially incorrect at the time they were made or as of Closing Date, the Authority may consider any such misrepresentation or breach a Loan Acceleration Default, subject to the terms set forth in Section 6.1(a)(iii) hereof. (h) The Borrower shall admit, treat and/or serve individuals, as applicable, in the Facilities without regard to race, creed, color, sex, sexual preference, source of income (e.g., TANF, SSI), disability, religion, national origin, marital status, familial status or political opinion or affiliation and shall respect, permit and not interfere with the religious beliefs of persons using the Project. Except to the extent permitted by the constitutions, statutes and laws of the United States and the State, the Borrower further agrees that it will not use or permit the use of the Project as a place of religious worship or sectarian instruction. (i) The acquisition, development, rehabilitation, equipping, ownership and/or operation of the Facilities is consistent with the Borrower’s organizational documents. (j) Any statements regarding the Project or the Borrower and set forth in a certificate signed by a Borrower Representative and delivered pursuant to this Agreement shall be deemed a representation and warranty by the Borrower as to such statements. (k) The Borrower has filed or caused to be filed all Federal, state and local tax returns or information returns which are required to be filed with respect to the Facilities on or before the date hereof, and has paid or caused to be paid all taxes as shown on said returns or on any assessment received by it, to the extent that such taxes have become due and payable other than P39 III. 9 those presently being or to be contested by the Borrower in good faith in accordance with Section 4.3(a) hereof. (l) To the extent the Loan is to be treated as a “program investment” as defined in Treasury Regulation Section 1.148-1(b), the Borrower (or any “related person” as such term is used in Section 147(a) of the Code) shall not purchase the Bond in an amount related to the amount of the Loan. Section 2.3 Representations and Warranties of the Lender. The Lender makes the following representations and warranties: (a) The Lender hereby agrees to purchase from the Authority the Bond in the Principal Amount of up to $7,600,000 in installments by funding draws under the Loan as provided herein and in the Loan Agreement for the purpose of financing the development, acquisition, rehabilitation and/or equipping of such Facilities. (b) The Lender represents that it is purchasing the Bond for its own account and not for reoffering to the public. In connection with its purchase of the Bond, the Lender agrees to deliver to the Authority an investor letter substantially in the form of Exhibit B hereto. In the event the Lender transfers the Bond, it shall be subject to transfer in whole and not in part; subsequent purchasers shall deliver investor letters to the Authority substantially in the form of Exhibit B hereto. ANY TRANSFEREE SHALL AGREE TO INDEMNIFY THE AUTHORITY FROM AND AGAINST ANY AND ALL LIABILITY, COST OR EXPENSE (INCLUDING ATTORNEYS’ FEES AND EXPENSES) THAT MAY RESULT IF THE REPRESENTATIONS OF SUCH TRANSFEREE CONTAINED IN ITS INVESTOR LETTER ARE FALSE IN ANY MATERIAL RESPECT. (End of Article II) P40 III. 10 ARTICLE III ISSUANCE OF THE BOND Section 3.1 Issuance and Sale of the Bond. In order to provide funds to make the Loan, the Authority will issue the Bond and sell and deliver it to the Lender on the Closing Date, subject to and as provided in the Loan Agreement. The Bond shall be issued as a draw-down bond, as further described in Section 3.3 below, and shall be deemed issued for federal income tax purposes only upon receipt by the Authority of not less than $50,001 from the Lender on account of its purchase of the Bond. Simultaneously with the delivery of the Bond on the Closing Date and subject to the provisions set forth below, the Authority, as secured lender, shall make the Loan to the Borrower and shall assign the Note and the Security to the Lender (except for the Unassigned Issuer’s Rights). The Loan shall be initially funded on the Closing Date and in periodic draws thereafter, subject to and as provided in the Loan Agreement. Section 3.2 Delivery of the Bond and Closing of the Loan. The delivery of the Bond and the closing of the Loan shall not occur until the following conditions are met: (a) The Authority and the Lender shall have received the original executed Loan Documents. (b) The Authority shall have received certified copies of the resolution of the City Council of the City of Aspen, Colorado, authorizing the Lender to purchase the Bond from the Authority and authorizing all actions taken or to be taken in connection with each of the Loan Documents, if applicable. (c) The Authority and the Lender shall have received (i) certified copies of resolutions of the Borrower authorizing all actions taken or to be taken in connection with each of the Loan Documents, if applicable, (ii) copies of the Borrower’s formation documents and (iii) an opinion of counsel to the Borrower in a form reasonably acceptable to the Authority and the Lender. (d) The Lender shall have received the additional documents specified in Section 4.2 of the Loan Agreement, and such other documents as it may reasonably require. (e) The Authority shall have executed and delivered to the Lender an endorsement of the Note and the Assignment of Security, for security purposes only (except as otherwise provided therein), to secure all obligations of the Authority under the Bond. (f) No Loan Acceleration Default nor any event which with the passage of time or the giving of notice would constitute a Loan Acceleration Default under the Loan Documents shall have occurred, as certified by a Borrower Representative. P41 III. 11 (g) All legal matters incident to the transactions contemplated by the Loan Documents shall be concluded to the reasonable satisfaction of Bond Counsel. (h) The Borrower shall have paid to the Authority a closing fee equal to $15,200 (0.20% of the maximum Principal Amount). (i) Bond Counsel shall have delivered to the Authority, with a reliance letter to the Lender, an opinion with respect to the tax-exempt status of the interest on the Bond. Section 3.3 Terms of the Bond. The Bond shall be deemed issued for federal income tax purposes only upon the funding of not less than $50,001 from the Lender. Other than with respect to the first draw on the Closing Date, the Borrower shall provide notice to the Lender of the principal amount of each draw to be delivered hereunder at least one Business Day in advance of such draw. The Bond shall be issued as a fully registered bond in the maximum Principal Amount of $7,600,000, shall bear interest on the Principal Amount Outstanding at the Interest Rate (calculated on a 360-day basis for the actual number of days principal is outstanding). The Bond shall be in the form contained in Exhibit A hereto. Payments of principal of and interest on the Bond shall be made to the Lender, as the registered owner of the Bond. Principal of and interest on the Bond shall be payable only from the Revenues. The Authority hereby directs the Lender, as servicer, to pay to the Lender, as the registered owner, when due and payable principal of and interest on the Bond from the Revenues. Upon receipt of payment in full of the outstanding principal balance of the Bond plus all accrued and unpaid interest, the Lender, shall immediately deliver the Bond to the Authority for cancellation. The Authority hereby agrees to assign to the Lender, as the registered owner, but only as security for payment of amounts payable on the Bond, the Note and the Security (except as otherwise provided in the Assignment of Security). The Lender and the Authority agree that the Authority shall have no responsibility for the perfection of the Lender’s security interest in the Note and the Security. Section 3.4 Redemption of the Bond. (a) Mandatory Redemption. The Bond is subject to redemption at a price equal to the outstanding Principal Amount of the Bond to be redeemed plus accrued interest thereon to the date fixed for redemption, as follows: (i) in whole, upon the receipt by all parties of a notice of Loan Acceleration Default hereunder; or (ii) in whole or in part, upon the occurrence of events described in Sections 4.5(a) and 4.9(b) hereof, if all or part of any insurance or condemnation proceeds will not be used to repair or replace the Facilities or to reimburse the Borrower therefor, in a principal amount equal to the proceeds not used for such repair or replacement. P42 III. 12 (b) Optional Redemption. The Bond is subject to redemption, in whole or in part, upon and in the amount of the prepayment of the Note in accordance with Section 4.5(b) hereof, on any day permitted under the Note and for which notice of such prepayment is given in accordance with Section 3.4(c) hereof, at a price equal to the outstanding Principal Amount of the Bond to be redeemed plus accrued interest thereon to the date fixed for redemption. (c) Notice. The Borrower shall give written notice to the Lender and the Authority of redemption of the Bond pursuant to Sections 3.4(a)(i) and (ii) hereof not less than five Business Days prior to the date set for redemption, specifying the reason for the redemption, the date set for redemption and the Principal Amount of the Bond to be redeemed. If notice of prepayment of the Note shall be given pursuant to Section 4.5 hereof, such notice shall be deemed to constitute notice of redemption of the Bond pursuant to Section 3.4(b) hereof, and the parties hereto waive any further notice of redemption pursuant to Section 3.4(b) hereof. (d) Miscellaneous. (i) If the Bond is redeemed pursuant to Section 3.4(a)(i) hereof, payment of the redemption price shall be deemed made by the Authority’s absolute assignment to the Lender of all right, title and interest of the Authority in the Note and the Security (except for the Unassigned Issuer’s Rights). (ii) Upon payment of the redemption price in accordance with this Section 3.4, the Bond (or portion thereof so redeemed) shall cease to bear interest from and after the date on which the redemption price is paid. If the Bond is redeemed in whole, the Lender shall immediately deliver the Bond to the Authority for cancellation. Section 3.5 Registration and Transfer. (a) The Authority shall maintain the registration records containing the name and address of the registered owner of the Bond. (b) The Lender hereby acknowledges that the Authority has agreed to sell the Bond to the Lender, enter into this Agreement and consummate the transactions hereunder only upon the Lender’s agreeing that it will only sell, assign or transfer the Bond or any interest therein, or any interest in the proceeds thereof as described in this Section 3.5 or with the Authority’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed if the transfer is within the Authority’s policy for the transfer of unrated, non-credit enhanced bonds, and the Lender so agrees. (c) The Lender hereby agrees that in the event the Lender transfers the Bond: (i) the Bond shall be subject to transfer in whole and not in part; and (ii) subsequent purchasers shall deliver investor letters to the Authority substantially in the form of Exhibit B hereto. Any transferee of the Bond must assume in writing the obligations of the Lender hereunder and under the Loan Agreement, including the obligation to fund additional draws under the Loan as provided herein and in the Loan Agreement. P43 III. 13 (d) The Authority and the Borrower each hereby approves the assignment or transfer of the Bond in whole to an entity succeeding or resulting from a merger or acquisition of the Lender. Section 3.6 Limitation on Liability of Authority. The Authority shall not be obligated to pay the principal of or interest on the Bond, except from Revenues. The Lender hereby acknowledges that the Authority’s sole source of moneys to pay principal of or interest on the Bond will be provided by such Revenues. THE BOND SHALL BE A SPECIAL, LIMITED OBLIGATION OF THE AUTHORITY PAYABLE SOLELY FROM REVENUES. THE BOND SHALL CONSTITUTE A VALID CLAIM OF THE OWNERS THEREOF AGAINST THE REVENUES, WHICH ARE PLEDGED TO SECURE THE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THE BOND, AND WHICH SHALL BE USED FOR NO OTHER PURPOSE EXCEPT AS EXPRESSLY AUTHORIZED IN THIS AGREEMENT. THE BOND SHALL NOT BE A DEBT OR INDEBTEDNESS OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF (INCLUDING THE AUTHORITY), AND NEITHER THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF SHALL BE LIABLE THEREON, NOR IN ANY EVENT SHALL THE BOND BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE AUTHORITY PLEDGED UNDER THIS AGREEMENT. THE BOND SHALL NOT CONSTITUTE AN INDEBTEDNESS OR A MULTIPLE FISCAL- YEAR FINANCIAL OBLIGATION WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. NEITHER THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF (EXCEPT THE AUTHORITY FROM THE SOURCES IDENTIFIED HEREIN) SHALL BE LIABLE FOR PAYMENT OF THE BOND NOR IN ANY EVENT SHALL PRINCIPAL OF AND INTEREST ON THE BOND BE PAYABLE OUT OF ANY FUNDS OR ASSETS OTHER THAN THOSE PLEDGED TO THAT PURPOSE BY THE AUTHORITY HEREIN. THE AUTHORITY HAS NO TAXING POWER. NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE BOND AGAINST ANY PAST, PRESENT OR FUTURE MEMBER OF THE AUTHORITY’S BOARD OF DIRECTORS, OR THE OFFICERS, COUNSEL, FINANCIAL ADVISORS OR AGENTS OF THE AUTHORITY, OR OF ANY SUCCESSOR THERETO, UNDER ANY RULE OF LAW OR EQUITY, STATUTE OR CONSTITUTION, AND ALL SUCH LIABILITY IS HEREBY EXPRESSLY WAIVED AND RELEASED AS A CONDITION OF, AND CONSIDERATION FOR, THE EXECUTION AND ISSUANCE OF THE BOND. P44 III. 14 Section 3.7 No Warranty. The obligation of the Authority hereunder to issue the Bond to provide funds to finance the Project does not in any way constitute a representation, warranty, guaranty, advice or suggestion by the Authority as to the feasibility or viability of the Facilities or the financing thereof, and may not be relied on as such by the Borrower, the Lender or any tenant, lender or other Person, for any reason. Section 3.8 Supplemental Public Securities Act Provisions. Pursuant to the resolution of the Authority authorizing the issuance of the Bond, the Authority has elected to apply Sections 11-57-205, 11-57-207, 11-57-208, 11-57-209, 11-57- 210, 11-57-211, 11-57-212 and 11-57-214 of the Supplemental Act to the Bond. Pursuant to said Section 11-57-210, the Bond shall recite that it is issued under the authority of such resolution and the Supplemental Act and that it is the intention of the Authority that such recital shall be conclusive evidence of the validity and the regularity of the issuance of the Bond after its delivery for value. Pursuant to said Section 11-57-208, the Revenues and other assets pledged under this Agreement for the payment of the Bond, as received by or otherwise credited to the Authority, shall immediately be subject to the lien of such pledge without any physical delivery, filing or further act. The lien of such pledge and the obligation to perform the contractual provisions made in such resolution and this Agreement shall have priority over any or all other obligations and liabilities of the Authority. The lien of such pledge shall be valid, binding and enforceable as against all Persons having claims of any kind in tort, contract or otherwise against the Authority irrespective of whether such Persons notice of such lien. (End of Article III) P45 III. 15 ARTICLE IV THE LOAN Section 4.1 Amount, Source and Funding of Loan. The Authority, as secured lender, hereby makes the Loan to the Borrower, on the terms and subject to the conditions set forth in this Agreement and the Loan Documents. The Borrower hereby (a) accepts the Loan from the Authority, upon the terms and conditions set forth in this Agreement and the Loan Documents, (b) agrees to execute and deliver the Note and the Security simultaneously with the execution of this Agreement, and (c) agrees to have the proceeds of the Loan applied and disbursed in accordance with this Agreement and the other Loan Documents. The Loan shall be deemed made when the Lender acknowledges receipt of the Bond, upon satisfaction of the conditions specified in Section 3.2 hereof and upon the delivery of the first installment of the purchase price of the Bond. To the extent there is an inconsistency between the terms of the Note and the terms of this Agreement, the terms of this Agreement shall prevail; provided, however, that all rights and remedies of the Lender and the Authority, and all obligations of the Borrower, in each case as set forth in this Agreement and the other Loan Documents are cumulative and not exclusive, and the failure to set forth any thereof in more than one Loan Document shall not be deemed an inconsistency. On the Closing Date, the Authority shall assign without recourse or warranty (except for warranties and representations made as of their date and except for the Unassigned Issuer’s Rights) the Note and the Security to the Lender, which shall accept such assignment. The Borrower hereby consents to the Authority’s assignment of the Note and the Security, as provided in the Assignment of Security, to the Lender. The Lender shall file financing statements and other documents as it deems necessary or desirable to perfect its security interests, and the Borrower hereby consents to all such filings. Section 4.2 Loan Repayment. (a) On each Interest Payment Date, the Borrower shall pay, in repayment of the Loan, to the Lender as servicer, until the principal of and interest on the Note shall have been paid in full as provided in the Note, an amount which will equal the sum of (i) the interest on the Note which is due on such Interest Payment Date and (ii) the principal of the Note due on such Interest Payment Date. (b) The Authority hereby directs the Lender, as servicer, to apply the amounts paid pursuant to Section 4.2(a) hereof to pay principal of and interest on the Bond, and the Lender and Borrower hereby agree that the application of such amounts to payments due on the Bond in accordance with Sections 3.3 and 3.4 hereof shall reduce the amount owing on the Note. Payments made on the Bond shall be deemed to be made on the same date and in the same amount on the Note. P46 III. 16 Section 4.3 Additional Payments. In addition to the payments of principal and interest on the Loan, the Borrower shall make the following additional payments: (a) All taxes and assessments, general or special, including, without limitation, all ad valorem taxes, concerning or in any way related to the Facilities, or any part thereof, and any other governmental charges and impositions whatsoever, foreseen or unforeseen, and all utility and other charges and assessments; provided, however, that the Borrower reserves the right to contest in good faith the legality or amount of any tax or governmental charge concerning or in any way related to the Facilities to the extent permitted by the Security. (b) (i) The costs incurred by the Borrower for the calculation of the Rebate Amount and (ii) any amounts required to be paid to the United States of America as the Rebate Amount. (c) Any out-of-pocket expenses incurred by the Authority in connection with any Transfer, in accordance with Section 5.3(a)(vi) hereof. (d) Any additional payments required by the Loan Agreement or the Security. Section 4.4 Nature of the Borrower’s Obligations. The Borrower shall repay the Loan and make the additional payments pursuant to the terms of Sections 4.2 and 4.3 hereof and the Note, irrespective of any rights of set-off, recoupment or counterclaim it might have against the Authority, the Lender or any other Person; provided, that any such payment shall not constitute a waiver by the Borrower of any claim for recoupment or of any counterclaim. The Borrower will not suspend, discontinue or reduce any such payment or (except as expressly provided herein) terminate this Agreement for any cause, including, without limiting the generality of the foregoing: (i) any delay or interruption in the acquisition, rehabilitation, equipping or operation of the Facilities; (ii) the failure to obtain any permit, order or action of any kind from any governmental agency relating to the Loan or the Facilities; (iii) any event constituting force majeure; (iv) any acts or circumstances that may constitute commercial frustration of purpose; (v) the termination of this Agreement or any of the other Loan Documents; (vi) any change in the laws of the United States of America, the State or any political subdivision thereof; or (vii) any failure of the Authority to perform or observe any covenant whether expressed or implied, or to discharge any duty, liability or obligation arising out of or connected with the Note; it being the intention of the parties that, as long as the Note or any portion thereof remains outstanding and unpaid, the obligation of the Borrower to repay the Loan and provide such moneys shall continue in all events. This Section 4.4 shall not be construed to release the Authority from any of its obligations hereunder, or, except as provided in this Section 4.4, to prevent or restrict the Borrower from asserting any rights which it may have against the Authority or the Lender under this Agreement, or under any provision of law, or to prevent or restrict the Borrower, at its own cost and expense, from prosecuting or defending any action or proceeding by or against the Authority or the Lender or taking any other action to protect or secure its rights. P47 III. 17 Section 4.5 Prepayment of Note. (a) As and to the extent provided in [Article 11 of] the Loan Agreement, the Note shall be prepaid in whole or in part, in the principal amount equal to any insurance or condemnation proceeds received by the Lender not used for repair or replacement or applied to other amounts secured by the Security, plus accrued interest thereon to the date fixed for prepayment, upon no less than five (5) Business Days written notice to all parties of the determination of the Lender or the Borrower, as set forth in the Security, if applicable, that all or part of such insurance or condemnation proceeds will not be used to repair or replace the Facilities (or to reimburse the Borrower therefor) or applied to other amounts secured by the Security. (b) The Note shall be prepaid in whole or in part, in accordance with its terms, at a price equal to the Principal Amount of the Note to be prepaid and accrued interest to the date fixed for such prepayment, upon no less than thirty (30) days written notice to the Authority and the Lender (or such shorter period as the Authority and the Lender may agree), as follows: (i) on any day permitted under the terms of the Note (but in no event prior to placement in service of the Facilities), if the Borrower in its sole discretion and to the extent permitted by the Note or the Security, if applicable, shall choose to prepay all or a portion of the Note or (ii) concurrently with the Transfer, if the Borrower shall Transfer all or a portion of the Facilities pursuant to Section 5.3(b) hereof. (c) In the event of a partial prepayment of the Note, the principal amount of the Borrower’s obligation under the Note shall be reduced by the Principal Amount of the Note prepaid, and such prepayment shall correspondingly reduce the principal balance of the Bond. (d) Each notice of prepayment required by this Section 4.5 shall state the date set for prepayment, the principal to be prepaid on the Note and the reason for prepayment. Such notice also shall state that the Bond shall be redeemed, in whole or in part, in a Principal Amount equal to the amount of the prepayment of the Note, on the date set for such prepayment. Section 4.6 Servicing Requirements. (a) The Lender shall service the Loan on behalf of the Authority. The Lender shall have full power and authority to do any and all things in connection with such servicing which it may deem necessary or desirable, and will exercise at least the same degree of care with respect to the Loan that the Lender exercises with respect to servicing loans for its own account. (b) The Lender will notify the Authority as soon as practicable if the Borrower has failed to make a payment due under the Note. (c) The Authority shall have no obligation to service the Loan on behalf of the Lender, as registered owner, or to enforce any remedies against the Borrower, it being understood among the parties that all servicing of the Loan and enforcement of any obligations of the Borrower shall be the sole responsibility of the Lender, as servicer. (d) The Lender covenants that so long as the Bond shall be unpaid, the Lender will keep proper books or records and accounts, in which full, true, and correct entries will be made P48 III. 18 of all its financial dealings or transactions in relation to the Project and the payments derived from the Loan Agreement, this Agreement, the Note and the Security. Upon reasonable notice and at reasonable times during the Lender’s regular business hours and under reasonable regulations established by the Lender, such books shall be open to the inspection of the Borrower or the Authority, and such accountants or other agencies as the Borrower or the Authority may from time to time designate in writing to the Lender. Section 4.7 Rights Under Loan Agreement. The Loan Agreement sets forth covenants and obligations of the Lender and the Borrower, and reference is hereby made to the same for a detailed statement of said covenants and obligations. The Authority agrees to cooperate in the enforcement of all covenants and obligations of the Borrower under the Loan Agreement, at the expense of the Borrower. Section 4.8 Rights Under Security. The Authority acknowledges that it has assigned its interest in and to the Security (except for the Unassigned Issuer’s Rights) to the Lender under this Agreement and that the Security further secures payment of the Loan, interest thereon, and amounts due under certain other Loan Documents, and reference is hereby made to the same for a detailed statement of the obligations of the parties thereto. Section 4.9 Insurance and Condemnation Proceeds. (a) The Borrower shall, throughout the term of this Agreement, obtain insurance for the Facilities to the extent required and in accordance with the Loan Agreement and the Security, if applicable. (b) The Lender shall hold and disburse all insurance proceeds or condemnation awards in accordance with the Security if applicable, and the Loan Agreement. Insurance proceeds or condemnation awards shall be used to repair or replace the Facilities (or reimburse the Borrower therefor) or to pay or prepay amounts owing under the Loan Documents in accordance with the Security and the Loan Agreement. The Lender or the Borrower, as appropriate, shall forthwith notify the other parties to this Agreement in writing of the use of any such proceeds or award; provided that such notice shall be sent no later than five Business Days prior to prepayment of the Note with the proceeds or award. (End of Article V) P49 III. 19 ARTICLE V FURTHER AGREEMENTS Section 5.1 Covenants of the Authority. The Authority covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in this Agreement, in the Bond executed, authenticated and delivered hereunder and in all of its proceedings pertaining thereto; provided, however, that (except for payment of the principal of and interest on the Bond from the Revenues as herein provided) the Authority shall not be obligated to take any action or execute any instrument pursuant to any provision hereof until it shall have been requested to do so by the Borrower or by the Lender, or shall have received the instrument to be executed, and at the Authority’s option shall have received from the Borrower assurance satisfactory to the Authority that the Authority shall be reimbursed by the Borrower for its reasonable expenses incurred or to be incurred in connection with taking such action or executing such instrument. The Authority covenants that it is duly authorized under the Constitution and laws of the State, including particularly and without limitation the Act and the Supplemental Act, to issue the Bond and to enter into this Agreement, to pledge the Revenues and other funds derived from this Agreement in the manner and to the extent herein set forth; that all action on its part for the issuance of the Bond and the execution and delivery of this Agreement has been duly and effectively taken; and that the Bond in the hands of the owners thereof is and will be a valid and enforceable obligation of the Authority according to the tenor and import thereof. Section 5.2 Borrower to Maintain its Existence; Conditions Under Which Exceptions Permitted. The Borrower agrees that during the term of this Agreement it will maintain its existence as a limited liability limited partnership, will continue to be duly qualified to do business in the State, and will neither dispose of all or substantially all of its assets nor consolidate with or merge into another entity, unless the Borrower shall have prepaid the Note in full or (i) the Borrower shall have first filed with the Authority an opinion of Bond Counsel at the sole cost and expense of the Borrower, to the effect that such disposal of assets, consolidation or merger will not cause the interest on the Bond to become subject to Federal or State income taxation, (ii) the acquirer of its assets or the entity with which it shall consolidate or into which it shall merge shall be an entity, organized and existing under the laws of the United States of America or one of the states of the United States of America and shall be qualified and admitted to do business in the State, (iii) such acquiring or remaining entity shall assume in writing all of the obligations of the Borrower under the Loan Documents, subject to all of the limitations of liability applicable to the Borrower, (iv) such acquisition shall comply with the provisions of the Security and (v) the Lender shall have provided prior written consent to such disposition, consolidation or merger, and shall have furnished to the Authority within 10 days after any such action notice thereof and an executed original document evidencing said consent. P50 III. 20 As soon as practicable, but not less than fifteen (15) days prior to the intended disposition of assets, consolidation or merger, the Borrower shall notify the Authority and the Lender of such intended transaction. Section 5.3 Sale or Conveyance of the Facilities. For so long as any amounts remain owing by the Borrower hereunder or under any of the other Loan Documents, the Borrower shall not voluntarily Transfer the Facilities or any portion thereof (other than for leases to residents or for any incidental use, to the extent permissible under all applicable Federal and state laws and regulations, or by granting a security interest junior to the Security and the Note if permitted by the Security) except with the written consent of the Lender and in compliance with the terms of the Security, and as follows: (a) The Borrower shall obtain the prior written consent of the Authority, which consent shall not be unreasonably withheld, conditioned or delayed, and shall be conditioned upon: (i) reasonable evidence satisfactory to the Authority that the Borrower is not then in default hereunder beyond any applicable grace period or cure period; (ii) an opinion of counsel for the Transferee, delivered to the Authority and the Lender, to the effect that (A) the Transferee is a validly existing entity that meets the then applicable requirements of the Authority, (B) the Transferee has assumed in writing and in full all duties and obligations of the Borrower under the Loan Documents, (C) the Loan Documents constitute the legal, valid and binding obligations of the Transferee and (D) operation of the Facilities by the Transferee will be within its charter, bylaws and/or comparable organizational documents; (iii) an opinion of Bond Counsel, at the sole cost and expense of the Borrower or the transferee, to the effect that such sale or conveyance of the Facilities will not cause the interest on the Bond to become subject to Federal income taxation; (iv) said written assumption of the Transferee and the written agreement of the Transferee to comply with all provisions of state and Federal law applicable to the Borrower under this Agreement; (v) evidence satisfactory to the Authority, with regard to any project of the Transferee financed by the Authority, that (A) the Transferee is not now in arrears on any payments of fees due and owing to the Authority or in default under any agreement with the Authority, beyond any applicable grace period or cure period, and (B) the Transferee does not have a documented history of repeated instances of noncompliance with provisions of the Authority equivalent to those in this Agreement or the Tax Certificate which are not cured after notice thereof and within the applicable cure period or grace period; P51 III. 21 (vi) payment to the Authority of any out-of-pocket expenses in connection with such Transfer; and (vii) any other conditions which may be reasonably imposed by the Authority to assure compliance with Federal or State law. Notwithstanding the foregoing, the Authority’s consent shall not be required: (i) for a sale, transfer or change in the general partner of the Borrower, including the addition, removal or withdrawal of a general partner in accordance with the Borrower’s partnership agreement; or (ii) following foreclosure or with respect to a deed in lieu of foreclosure (but not upon the subsequent transfer of the Project following foreclosure or a deed in lieu of foreclosure). (b) If the Transferee does not meet all requirements set forth in Section 5.3(a) hereof, the Borrower shall notify the Authority in writing no later than fifteen (15) days prior to the intended Transfer. The Borrower hereby agrees that the proceeds of such Transfer shall, concurrently with such Transfer, be used to prepay the Note in full pursuant to Section 4.5(b) hereof and to redeem the Bond in full pursuant to Section 3.4(b) hereof; provided, that all proceeds of said Transfer in excess of the outstanding principal balance of the Note and accrued interest to such date shall be retained by the Borrower and, provided further, that until prepayment in full of the Note and the corresponding redemption of the Bond, this Agreement, the Tax Certificate, the Note, the Security and the other Loan Documents shall remain in full force and effect, and the Borrower and the Facilities shall retain all obligations hereunder and thereunder. (c) As soon as practicable and not later than fifteen (15) days prior to the intended date of any transfer of the Facilities, the Borrower shall notify the Authority and the Lender of such transaction. As soon as practicable following such transaction, the Borrower shall provide to the Authority and the Lender copies of any executed documents obtained by the Lender evidencing the transfer of title to the Facilities and any written assumption by the Transferee of the Loan Documents, as well as copies of all other documents obtained by the Borrower that may be executed in regard to such Transfer. (d) No Transfer of the Facilities in violation of Section 5.3(a) or (b) hereof shall relieve the Borrower or the Facilities of obligations under this Agreement or the Tax Certificate. Section 5.4 Tax-Exempt Status of Bond; Arbitrage. It is the intention of the parties hereto that interest on the Bond shall be and remain excluded from gross income of the holder of the Bond under Federal tax law, and to that end the covenants and agreements of the Authority, the Lender and the Borrower in this Section 5.4 are for the benefit of the Authority as issuer of the Bond and the Lender as owner of the Bond. The Lender, the Borrower and the Authority covenant and agree that they have not taken or permitted to be taken and will not take or permit to be taken any action that will cause the interest on the Bond to become included in gross income for Federal tax purposes pursuant to the Code or cause the Bond to become an “arbitrage bond” within the meaning of Section 103 of the Code; provided, that none of the covenants and agreements herein contained shall require the Lender, the Borrower or the Authority to enter an appearance or intervene in any administrative, P52 III. 22 legislative or judicial proceeding in connection with any changes in applicable laws, rules or regulations or in connection with any decisions of any court or administrative agency or other governmental body affecting the taxation of interest on the Bond; and provided further, that each party’s responsibility under this Section 5.4 shall be limited to actions within its respective control. The Borrower agrees to pay in accordance with Section 4.3(b) hereof, the costs of the calculation of the Rebate Amount and the amount of the Rebate Amount, if any, owing to the United States of America on the Bond. The Borrower specifically covenants to comply with the provisions of the Tax Certificate. Without limiting the generality of the foregoing, the Borrower and the other parties hereto covenant and agree that they will take such action or actions (including, without limitation, consenting and agreeing to amendments to the Loan Documents as may be necessary in the opinion of Bond Counsel), at the sole cost and expense of the Borrower, so that the Borrower, all subsequent owners of the Facilities, and the Facilities comply fully and continuously with Section 148 of the Code, as amended, and applicable to the Bond from time to time, all applicable rules, rulings, policies, procedures, regulations or other official statements now or in the future promulgated or proposed by the Department of the Treasury or the Internal Revenue Service pertaining to obligations issued under Section 148 of the Code, including, without limitation, the Treasury Regulations, and with all applicable legislative enactments or applicable final decisions of courts of competent jurisdiction. By virtue of the Borrower’s agreeing to comply with future laws or regulations, the parties do not intend nor shall they be deemed to waive any rights or defenses they may have, individually or collectively, to contest the application of such laws or regulations to the Facilities or the Project on the grounds that such application would constitute a prohibited impairment of contract or on any other applicable grounds. Nevertheless, while contesting the application of any such laws or regulations, the Borrower shall take such actions deemed necessary in the opinion of Bond Counsel to maintain the exclusion from gross income of interest on the Bond. To the extent necessary to retain the exclusion of the interest on the Bond from gross income for purposes of Federal income taxation or otherwise required by law, the provisions of this Section 5.4 shall survive termination of this Agreement. Section 5.5 Additional Instruments. The Borrower hereby covenants to execute and deliver such additional instruments and to perform such additional acts as may be necessary, in the reasonable opinion of the Authority or the Lender, to carry out the intent of the Loan Documents or to perfect or give further assurances of any of the rights granted or provided for in the Loan Documents; provided that no such instruments or acts shall change the economic terms of the transactions described herein or expand the liabilities of the parties hereunder without the consent of all the parties hereto. P53 III. 23 Section 5.6 Books and Records. (a) The Borrower hereby covenants to permit the Authority, the Lender or their duly authorized representatives access, upon reasonable notice, during normal business hours to the books and records of the Borrower pertaining to the Loan and the Facilities, and to make such books and records available for audit and inspection, at reasonable times and under reasonable conditions, to the Authority and the Lender and their duly authorized representatives. (b) The Borrower hereby agrees to retain all draw requests submitted by the Borrower to the Lender pertaining to the Loan and the Facilities for a period of seven (7) years from the date of the final payment on the Bond. Section 5.7 Notice of Certain Events. The Borrower and the Lender each hereby covenants to advise the Authority and the other party hereto promptly in writing of the occurrence of any Default hereunder of which it has actual notice or any event which, with the passage of time or service of notice, or both, would constitute a Loan Acceleration Default hereunder of which it has actual notice, specifying the nature and period of existence of such event and the actions being taken or proposed to be taken with respect thereto. In addition, the Borrower hereby covenants to advise the Authority and the Lender promptly in writing of the occurrence of any default under the Loan Documents or of the occurrence of an Act of Bankruptcy of the Borrower. Section 5.8 Indemnification of the Authority and the Lender. The Borrower shall indemnify, hold harmless and defend the Authority and the Lender (except to the extent of gross negligence or willful misconduct by the Authority or the Lender, respectively) and the officers, members, directors, officials, agents and employees of each of them from and against: (i) any and all claims or proceedings by or on behalf of any Person directly or indirectly arising from any cause whatsoever in connection with the Facilities, the Project, the Loan Documents or any act or omission of the Borrower or any of its agents, servants, employees or licensees, in connection with the Loan or the Facilities and (ii) all reasonable costs, expenses, damages, counsel fees or liabilities incurred in connection with any such claim or proceeding brought thereon. In the event that any action or proceeding is brought against the Authority or the Lender or any of its officers, members, directors, officials, agents or employees, with respect to which indemnity may be sought from the Borrower hereunder, the Borrower, upon written notice from the Authority or the Lender, shall assume the investigation and defense of the Authority and/or the Lender thereof, including the employment of counsel selected by the Authority or the Lender and the payment of all reasonable expenses related thereto; provided, that no settlement of a claim or proceeding against an indemnified party shall occur without the consent of such indemnified party. Notwithstanding any Transfer of the Facilities in accordance with the provisions of this Agreement and the other Loan Documents, the Borrower shall remain obligated to indemnify the Authority and the Lender against claims arising from the period prior to such Transfer and during all times when the Borrower owned or had an interest in the Facilities. P54 III. 24 The rights of the Authority and the Lender under this Section shall survive the payment in full of the Bond and termination of this Agreement. Section 5.9 Compliance with Usury Laws. Notwithstanding any other provision of this Agreement, it is agreed and understood that in no event shall this Agreement, with respect to the Note or other instrument of indebtedness, be construed as requiring the Borrower or any other Person to pay interest and other costs or considerations that constitute interest under any applicable law which are contracted for, charged or received pursuant to this Agreement in an amount in excess of the maximum amount of interest allowed under any applicable law. In the event of any acceleration of the payment of the Principal Amount of the Note, that portion of any interest payment in excess of the maximum legal rate of interest, if any, provided for in this Agreement or related documents shall be canceled automatically as of the date of such acceleration, or if theretofore paid, shall be credited against the Borrower’s obligations under the Note and the payments due on the Bond shall be correspondingly reduced. The provisions of this Section 5.9 shall prevail over any other provision of this Agreement. Section 5.10 Compliance with Other Laws. To the Borrower’s knowledge, the design, construction and operation of the Facilities as described herein do not and will not conflict with any zoning, water or air pollution or other ordinance, order, law or regulation applicable thereto; if the Project is new construction, the Borrower has caused the Facilities to be designed in accordance with all the applicable Federal, state and local laws or ordinances (including rules and regulations) relating to zoning, building, safety, and environmental quality; and the Borrower has not failed to obtain (or will obtain when required) and maintain in effect any licenses, permits, franchises or other governmental authorizations necessary for the operation and conduct of the Facilities. The Borrower shall comply with Federal housing policy governing nondiscrimination and accessibility, as determined under the Americans with Disabilities Act, the Fair Housing Amendments Act of 1988, the rules and regulations of HUD and any other applicable Federal, state and local law. Section 5.11 Maintenance and Repair of Facilities. The Borrower agrees to maintain the Facilities or cause the Facilities to be maintained, during the term of this Agreement, (a) in a reasonably safe condition and (b) in good repair and in good operating condition, ordinary wear and tear excepted. Section 5.12 Additional Covenants Required by the Lender. The Borrower covenants to comply with the terms and conditions set forth in the Loan Agreement and the other Security, which are required by the Lender as a condition for providing the Loan. P55 III. 25 (End of Article VI) P56 III. 26 ARTICLE VI EVENTS OF DEFAULT AND REMEDIES Section 6.1 Defaults. (a) A “Default” of the Borrower under this Agreement shall exist when any one or more of the following shall occur (whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental authority): (i) The Borrower fails to pay (A) any installment of principal or interest payable pursuant to the Note or the Loan Agreement on the date when due, or (B) any other amount payable under the Note, the Loan Agreement, this Agreement, or the Security within five (5) days after the date when any such payment is due in accordance with the terms of such document and not cured within applicable cure periods. (ii) The Borrower and the Authority shall receive written notice from the Lender that an “Event of Default” has occurred under the Loan Agreement, the Note and/or the Security, if applicable (other than a failure to pay any amount due on the Note), and that the Lender declares that such occurrence shall be treated as a Default hereunder; provided, however, that the Lender shall have given the Borrower and Borrower’s limited partner notice of such default and at least 15 days within which to cure such default before the Lender shall exercise the remedies described in Sections 6.2 and 6.3 hereof. (iii) The Borrower (A) shall transfer the Facilities in violation of the provisions hereof or the Security, (B) shall receive written notice from the Lender or the Authority (with a copy to the other parties hereto) that the Borrower has failed to observe any of its obligations, covenants or agreements hereunder (other than as specified in Section 6.l(a)(i) hereof), under the Tax Certificate, the Regulatory Agreement or the Tax Credit Regulatory Agreement, if applicable, and such failure shall continue for thirty (30) days following such notice to the Borrower and the Borrower’s limited partner unless the Lender and the Authority shall agree in writing to an extension of such time prior to its expiration, or (C) shall receive written notice from the Lender or the Authority (with a copy to the other parties hereto) that the Borrower has made any material representation or warranty hereunder or under the Tax Certificate or the Regulatory Agreement, if applicable, that was false when made. (iv) The Borrower purports to revoke, disputes the validity of or disputes the enforceability of its obligations under any of the Loan Documents. (v) An Act of Bankruptcy of the Borrower. (b) A “Default” of the Lender shall occur when (i) the Lender shall receive written notice from the Authority that the Lender has failed to observe any of its obligations, covenants or agreements hereunder, and such failure shall continue for thirty (30) days following such notice or (ii) the Lender shall receive written notice from the Authority that the Lender has made P57 III. 27 any material representation or warranty hereunder or under the Tax Certificate or the Regulatory Agreement, if applicable, that was false when made. (c) A “Default” shall occur when the Borrower and the Authority receive written notice from the Lender that a Determination of Taxability has occurred and the cure period, if any, provided for in such notice of a Determination of Taxability has expired without the cure, to the satisfaction of the Lender, in reliance on the advice of Bond Counsel, of the problem identified in the Lender’s notice; provided, that in the event of a Determination of Taxability pursuant to clause (a) or (b) of the definition thereof, such notice shall provide for a cure period of at least 30 days unless, in the judgment of the Authority, in reliance on the advice of Bond Counsel, no cure is possible. (d) If practicable, any party, including the Borrower’s limited partner, may, but is not obligated to, cure an action or inaction of another party that, if uncured within the applicable time period, would become a Default hereunder and such cure shall be accepted or rejected on the same basis as if made or tendered by the party. Section 6.2 Loan Acceleration Default. No Default under Section 6.1 hereof (other than Section 6.1(a)(v) hereof) shall constitute a Loan Acceleration Default unless or until the Borrower and the Authority receive a written “Notice of Loan Acceleration Default” from the Lender. A Default under Section 6.1(a)(v) hereof shall constitute a Loan Acceleration Default immediately upon the occurrence thereof. Section 6.3 Remedies. (a) Whenever any Loan Acceleration Default under Section 6.2 hereof shall have occurred and be continuing: (i) The Bond shall be subject to mandatory redemption in whole pursuant to Section 3.4(a)(i) hereof. (ii) Subject to the provisions of Section 4.4 hereof, the non-defaulting parties also may take whatever action at law or in equity appears necessary or desirable to enforce performance and observance of any obligation or agreement in respect of which the Loan Acceleration Default has occurred. (iii) The Lender may exercise any and all of its rights under the Loan Documents, including but not limited to its rights under the Assignment of Security and the Security. (b) Whenever any Default under Section 6.1 hereof shall have occurred and be continuing, the non-defaulting parties, subject to the provisions of Section 4.4 hereof, may exercise any or all remedies set forth in the Security and may take whatever additional action at law or in equity that appears necessary or desirable to enforce performance and observance of any obligation or agreement in respect of which the Default has occurred. P58 III. 28 (c) Any amounts collected as payments of principal of or interest on the Note, or applicable to such payments, pursuant to action taken under this Section 6.3 shall be applied to payments of amounts due on the Bond. Section 6.4 Attorneys’ Fees and Costs. If (a) a Default pursuant to Section 6.1 hereof occurs or (b) any non-defaulting party should employ attorneys or incur expenses for the enforcement of any obligation or agreement of the defaulting party or parties contained herein, then the defaulting party or parties, as applicable, on demand will pay to the non-defaulting party the reasonable fees of such attorneys and the reasonable costs so incurred, including, without limitation, reasonable fees and costs of court appeals. Section 6.5 No Remedy Exclusive. No remedy herein conferred upon or reserved to any party 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, the Loan Agreement or the Security or now or hereafter existing at law or in equity or 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 any non-defaulting party or parties to exercise any remedy reserved to it in this Article VI, it shall not be necessary to give any notice, other than such notice as may be herein expressly required. Section 6.6 No Additional Waiver Implied by One Waiver. In the event any agreement or covenant contained in this Agreement should be breached by a party hereto and thereafter waived by another party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. (End of Article VI) P59 III. 29 ARTICLE VII MISCELLANEOUS Section 7.1 Entire Agreement. This Agreement, the Tax Certificate and the other Loan Documents constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the Authority, the Lender and the Borrower with respect to the subject matter hereof. Section 7.2 Notices. All notices, certificates or other communications shall be in writing and shall be sufficiently given and shall be deemed received on the Business Day on which the same have been sent by facsimile or other electronic communication, on the next Business Day following the day on which the same have been personally delivered (either by messenger or courier service which guarantees next day delivery) or (if not by such messenger or by courier service), on the second Business Day following the date on which the same has been mailed by certified mail, return receipt requested, postage prepaid, addressed as follows: If to Authority: Colorado Housing and Finance Authority 1981 Blake Street Denver, Colorado Attention: Director of Community Development Telephone: (303) 297-7363 Fax: (303) 291-5709 and Colorado Housing and Finance Authority 1981 Blake Street Denver, Colorado 80202 Attention: General Counsel Telephone: (303) 297-7314 Fax: (303) 291-5712 If to the Lender: City of Aspen, Colorado 130 S. Galena Street Aspen, Colorado 81611 Attention: Finance Director Telephone: (970) 920-5027 P60 III. 30 with a copy to: City of Aspen, Colorado 130 S. Galena Street Aspen, Colorado 81611 Attention: City Attorney Telephone: (970) 920-5708 If to Borrower: ACI Affordable 1 LLLP c/o City of Aspen, Colorado 130 S. Galena Street Aspen, Colorado 81611 Attention: _______________ Telephone: ______________ with a copy to: Bryan Cave LLP One Boulder Plaza 1801 13th Avenue, Suite 300 Boulder, Colorado 80302 Attention: Paul Smith, Esq. Telephone: (303) 417-8508 A duplicate copy of each notice, certificate or other communication given hereunder by any party hereto to another party hereto shall also be given to all of the parties. All other documents required to be submitted to any of the foregoing parties shall also be submitted to such party at its address set forth above. Any of the foregoing parties may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates, documents, or other communications shall be sent. Section 7.3 Assignments. This Agreement may not be assigned by any party without the prior written consent of all parties hereto, which consent shall not be unreasonably withheld, conditioned or delayed; provided, that (a) the Borrower may assign to any transferee or any surviving or resulting entity its rights under this Agreement as provided by Section 5.2 or Section 5.3 hereof and (b) the Lender may assign this Agreement without the further consent of any party hereto to any assignee of the Bond in accordance with Section 3.5 hereof. Section 7.4 Waiver of Jury Trial. TO THE EXTENT ALLOWED BY LAW, THE AUTHORITY, THE BORROWER AND THE LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY P61 III. 31 LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER’S EXECUTION OF THIS AGREEMENT. Section 7.5 Severability. If any provision of this Agreement shall be held or deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative, or unenforceable to any extent whatever. Section 7.6 Execution of 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. Section 7.7 Amendments, Changes and Modifications. Except as otherwise specifically provided in this Agreement, this Agreement may not be effectively amended, changed, modified, altered or terminated without the written consent of all the parties hereto. In addition to all requirements contained therein, the terms of the Note, the Regulatory Agreement or the Security may not be amended, changed, modified, altered or terminated without the written consent of the Authority. The Lender or the Borrower shall provide the Authority with notice of any change, modification, alteration, or termination of the Security. Section 7.8 Governing Law. This Agreement shall be governed exclusively by and construed in accordance with the applicable laws of the State. Section 7.9 Term of Agreement. This Agreement shall be in full force and effect from the date hereof until such time as the Bond, and all other payment obligations of the Borrower hereunder and under the other Loan Documents (other than contingent obligations), shall have been fully paid; provided, that the Lender’s and the Authority’s rights to indemnification under Section 5.8 hereof and the provisions of Section 5.4 hereof, and Section 5.3 hereof to the extent provided therein, shall survive the termination of this Agreement. Time is of the essence in this Agreement. Section 7.10 Non-Business Days. Any payment or act required to be done or made on a day that is not a Business Day shall be done or made on the next succeeding day that is a Business Day with the same force and effect as if it had been done on the date originally scheduled for such payment or act. Section 7.11 Parties to Act Reasonably. P62 III. 32 When the consent, approval, determination or authorization of any party to this Agreement is required, unless otherwise provided, such party will act reasonably in deciding whether to provide such consent, approval, determination or authorization and will not unreasonably withhold, condition or delay such decision or such consent, approval, determination or authorization. Section 7.12 No Violations of Law. Any other term or provision in this Agreement to the contrary notwithstanding, (a) in no event shall this Agreement be construed as (i) depriving the Authority of any right or privilege, or (ii) requiring the Authority or any member of its Board of Directors, official, officer, agent, employee, representative or advisor of the Authority to take or omit to take, or to permit or suffer the taking of, any action by itself or by anyone else, which deprivation or requirement would violate, or result in the Authority’s being in violation of the Act or any other applicable state or federal law; and (b) at no time and in no event will the Borrower permit, suffer or allow any of the proceeds of the Bond to be transferred to any Person in violation of, or to be used in any manner which is prohibited by, the Act or any other state or federal law. Section 7.13 Agreement of the State. In accordance with the Act, the Authority hereby includes as a part of its contract with owners of the Bond the following pledge and agreement of the State: The State does hereby pledge to and agree with the owners of the Bond that the State will not limit or alter the rights hereby vested in the Authority to fulfill the terms of any agreements made with the owners of the Bond or in any way impair the rights and remedies of the owners of the Bond until the Bond, together with the interest thereon, with interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceeding by or on behalf of the owners of the Bond are fully met and discharged. [Signature page follows] P63 III. S-1 [Signature page to Financing Agreement] IN WITNESS WHEREOF, the parties hereto have executed this Financing Agreement, all as of the day and year first above mentioned. COLORADO HOUSING AND FINANCE AUTHORITY By: _____________________________________ Chief Financial Officer Attest: By: Assistant Secretary ACI AFFORDABLE 1 LLLP, a Colorado limited liability limited partnership By: City of Aspen, Colorado, general partner By: ______________________________ Name: Steve Skadron Title: Mayor (SEAL) Attest: City Clerk CITY OF ASPEN, COLORADO By: _________________________________ Name: Steve Skadron Title: Mayor (SEAL) Attest: City Clerk P64 III. A-1 EXHIBIT A FORM OF BOND No. __ $__________ COLORADO HOUSING AND FINANCE AUTHORITY MULTIFAMILY HOUSING REVENUE BOND (ASPEN COUNTRY INN PROJECT) SERIES 2016 INTEREST RATE: ____% per annum DATED DATE: July __, 2016 MATURITY DATE: [August 1, 2017] REGISTERED OWNER: __________________________ MAXIMUM PRINCIPAL AMOUNT: $7,600,000 NOTICE: THIS BOND IS NOT REGISTERED UNDER STATE OR FEDERAL SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD, PLEDGED (EXCEPT BY A PLEDGE PURSUANT TO THE TERMS OF WHICH ANY OFFER OR SALE UPON FORECLOSURE WOULD BE MADE IN A MANNER THAT WOULD NOT VIOLATE THE REGISTRATION PROVISIONS OF FEDERAL OR STATE SECURITIES LAWS) OR OTHERWISE DISTRIBUTED FOR VALUE, NOR MAY THIS BOND BE TRANSFERRED ON THE BOOKS OF THE AUTHORITY, EXCEPT IN ACCORDANCE WITH SECTION 3.5 OF THE FINANCING AGREEMENT. TO THE EXTENT REQUIRED UNDER THE FINANCING AGREEMENT. ANY ATTEMPT TO TRANSFER THIS BOND IN VIOLATION OF THIS RESTRICTION SHALL BE VOID. THIS BOND AND THE ISSUE OF WHICH IT FORMS A PART ARE NOT GENERAL OBLIGATIONS OF THE AUTHORITY BUT ARE LIMITED OBLIGATIONS PAYABLE SOLELY FROM THE MONEY AND PROPERTIES PLEDGED FOR PAYMENT THEREOF. COLORADO HOUSING AND FINANCE AUTHORITY (the “Authority”), a body corporate and political subdivision of the State of Colorado (the “State”), for value received, promises to pay to the registered owner specified above or registered assigns, but solely from the sources and in the manner referred to herein, the Principal Amount specified above on the aforesaid Maturity Date or on such earlier date as provided herein, and interest on the balance of said Principal Amount from time to time as determined by the records of the Lender and P65 III. A-2 remaining unpaid from the later of the date hereof or the most recent Interest Payment Date (as defined below) to which interest has been paid, at the Interest Rate per annum set forth above, payable on the first day of each month, commencing [September] 1, 2016 (each, an “Interest Payment Date”). Principal of and interest on this Bond are payable at the principal office of the Registered Owner, or at such other place and in such other manner as may be elected by the Registered Owner hereof in accordance with the Financing Agreement (as defined below). Upon payment in full of the principal of this Bond, whether at maturity or prior redemption, the Registered Owner shall forthwith deliver this Bond to the Authority for cancellation. Principal and interest are payable at the times and in the amounts that principal and interest, respectively, are payable under the Note by the Borrower (as defined below). NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THIS BOND AGAINST ANY PAST, PRESENT OR FUTURE MEMBER OF THE AUTHORITY’S BOARD OF DIRECTORS, OR THE OFFICERS, COUNSEL OR AGENTS OF THE AUTHORITY, OR OF ANY SUCCESSOR THERETO, UNDER ANY RULE OF LAW OR EQUITY, STATUTE OR CONSTITUTION, AND ALL SUCH LIABILITY IS HEREBY EXPRESSLY WAIVED AND RELEASED AS A CONDITION OF, AND CONSIDERATION FOR, THE EXECUTION AND ISSUANCE OF THIS BOND. THE BOND SHALL BE A SPECIAL, LIMITED OBLIGATION OF THE AUTHORITY PAYABLE, AS TO PRINCIPAL AND INTEREST SOLELY FROM THE REVENUES, AS PROVIDED IN THE FINANCING AGREEMENT. THE BOND SHALL CONSTITUTE A VALID CLAIM OF THE REGISTERED OWNERS THEREOF AGAINST SUCH REVENUES, WHICH ARE PLEDGED TO SECURE THE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THE BOND, AND WHICH SHALL BE USED FOR NO OTHER PURPOSE EXCEPT AS EXPRESSLY AUTHORIZED IN THE FINANCING AGREEMENT. THE BOND SHALL NOT BE A DEBT OR INDEBTEDNESS OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF (INCLUDING THE AUTHORITY), AND NEITHER THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF SHALL BE LIABLE THEREON, NOR IN ANY EVENT SHALL THE BOND BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE AUTHORITY PLEDGED UNDER THE FINANCING AGREEMENT. THE BOND SHALL NOT CONSTITUTE AN INDEBTEDNESS OR A MULTIPLE FISCAL-YEAR FINANCIAL OBLIGATION WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. NEITHER THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF (EXCEPT THE AUTHORITY FROM THE SOURCES IDENTIFIED HEREIN) SHALL BE LIABLE FOR PAYMENT OF THE BOND NOR IN ANY EVENT SHALL PRINCIPAL OF AND INTEREST ON THE BOND BE PAYABLE OUT OF ANY FUNDS OR ASSETS OF THE AUTHORITY OTHER THAN THOSE PLEDGED TO THAT PURPOSE BY THE AUTHORITY HEREIN. THE AUTHORITY HAS NO TAXING POWER. This Bond shall not constitute the personal obligation, either jointly or severally, of the Authority or of any director, officer, employee or official of the Authority. This Bond constitutes a duly authorized issue of the Colorado Housing and Finance Authority Multifamily Housing Revenue Bond (Aspen Country Inn Project) Series 2016 (the P66 III. A-3 “Bond”), issuable under the Financing Agreement dated as of July __, 2016 (the “Financing Agreement”) among the Authority, the City of Aspen, Colorado, a home rule municipality of the State of Colorado (the “Lender”) and ACI Affordable 1 LLLP, a Colorado limited liability limited partnership (the “Borrower”). This Bond is issued pursuant to the Colorado Housing and Finance Authority Act, being part 7 of article 4 of title 29, Colorado Revised Statutes (the “Act”), the Supplemental Public Securities Act, constituting Article 57, Title 11, Sections 201, et seq. of the Colorado Revised Statutes, as amended (the “Supplemental Act”) and a resolution duly adopted by the Authority. The principal amount of this Bond shall be the initial principal amount hereof plus the principal amount of each draw delivered pursuant to the Financing Agreement, less any principal payments of such Bond previously received by the Lender. This Bond is issued to provide funds for the Authority’s making of a loan (the “Loan”) to finance eligible facilities of the Borrower and to pay certain costs of such financing. The Authority has assigned the Loan, the Note and the Security (to the extent granted for the benefit of the Authority and except for the Unassigned Issuer’s Rights) to the Lender as the initial Registered Owner of this Bond. Reference is hereby made to the Financing Agreement, the Note, the Security and the Loan Agreement between the Lender and the Borrower, which are on file with the Lender, for the provisions, among others, with respect to the nature and extent of the rights, duties and obligations of the Authority, the Lender, the Borrower and the Registered Owner, the terms upon which this Bond is issued and secured; the collection and disposition of Revenues; a description of the properties and interests pledged; the modification or amendment of the Financing Agreement; and other matters, to all of which the Registered Owner of this Bond assents by the acceptance of this Bond. This Bond is subject to mandatory redemption at a price equal to the outstanding principal amount of this Bond plus accrued interest thereon to the date fixed for redemption, as follows: (a) in whole, upon the receipt by all parties of notice of Loan Acceleration Default under the Financing Agreement; and (b) in whole or in part, upon the occurrence of events described in Sections 4.5(a) and 4.9(b) of the Financing Agreement, if all or part of any insurance or condemnation proceeds will not be used to repair or replace the Facilities or to reimburse the Borrower therefor, in a principal amount equal to the proceeds not used for such repair or replacement. (c) This Bond also is subject to optional redemption, in whole or in part, upon and in the amount of the prepayment of the Note at the option of the Borrower in accordance with Section 4.5(b) of the Financing Agreement on any day permitted under the Note and for which notice of such prepayment is given in accordance with the Financing Agreement and the Note, at a price equal to the outstanding principal amount of this Bond plus accrued interest thereon to the date fixed for redemption. Written notice of redemption pursuant to subparagraphs (a), (b) and (c) above shall be given by the Authority, in accordance with the Financing Agreement, not less than five Business P67 III. A-4 Days prior to the date set for redemption. By the acceptance of this Bond, the Registered Owner agrees that the notices required under the Financing Agreement regarding the use of insurance or condemnation proceeds and the prepayment of the Note will provide sufficient notice of any redemption of this Bond pursuant to the immediately preceding paragraph or subparagraph (b) or (c) above, and the Registered Owner waives any additional notice from the Authority of such redemption. Failure of the Registered Owner to receive notice by mail or any defect in any notice so mailed shall not affect the validity of the proceedings for such redemption. This Bond or portion thereof called for redemption will cease to bear interest on the specified redemption date if, on such date, the redemption price is paid or is deemed paid as provided in the Financing Agreement. If this Bond is redeemed pursuant to subparagraph (a) above, payment of the redemption price shall be deemed to have been made in accordance with the Authority’s prior absolute assignment to the Lender of all right, title and interest of the Authority in the Note, the Security and the other Loan Documents (except for the Unassigned Issuer’s Rights). In the event of any other redemption of this Bond, payment of the redemption price shall be made from the Revenues. No recourse for the payment of the principal of or interest on this Bond or for any claim based thereon or under or upon any obligation, covenant, acceptance or agreement contained in the Financing Agreement, or in this Bond, or under any judgment obtained against the Authority or by the enforcement of any assessment or by any legal or equitable proceeding by virtue of any constitution or statute or otherwise, or under any circumstances, shall be had against any member or officer, as such, past, present, or future, of the Authority, for the payment for or to the Authority or any receiver thereof, or for or to the Registered Owner of this Bond, or otherwise, of any sum that may be due and unpaid by the Authority upon this Bond. Any and all personal liability of every nature, whether at common law or in equity, or by statute or by constitution or otherwise, of any such member or officer, as such, to respond by reason of any act or omission on his or her part, or otherwise, for, directly or indirectly, the payment for or to the Authority or any receiver thereof, or for or to the owner or the Registered Owner of this Bond, or otherwise, of any sum that may remain due and unpaid upon this Bond, shall be deemed to be and is hereby expressly waived and released as a condition of and consideration for the execution and delivery of the Financing Agreement and the issuance of this Bond. The Registered Owner shall have no right to enforce the provisions of the Financing Agreement or to institute action to enforce the covenants therein, or to take any action with respect to any Default under the Financing Agreement, or to institute, appear in or defend any suit or other proceedings with respect thereto, except as provided in the Financing Agreement. If a Loan Acceleration Default occurs, this Bond shall be subject to mandatory redemption in whole. Any capitalized term not defined herein shall have the meaning assigned in the Financing Agreement or the Note. It is certified and recited that there have been performed and have happened in regular and due form, as required by law, all acts and conditions necessary to be done or performed by the Authority or to have happened (a) precedent to and in the issuing of this Bond in order to P68 III. A-5 make it a legal, valid and binding special limited obligation of the Authority, and (b) precedent to and in the execution and delivery of the Financing Agreement; and that this Bond does not exceed or violate any constitutional or statutory limitation. It is certified, recited, and warranted that this Bond is issued under the authority of a resolution duly adopted by the Board of Directors of the Authority and the Supplemental Public Securities Act, constituting Part 2 of Article 57 of Title 11, Colorado Revised Statutes. It is the intention of the Authority, as expressed in said resolution, that this recital shall conclusively impart full compliance with all of the provisions of said resolution and shall be conclusive evidence of the validity and the regularity of the issuance of this Bond after its delivery for value and that this Bond is incontestable for any cause whatsoever after its delivery for value. This Bond will not be entitled to any security or benefit under the Financing Agreement, or be valid or become obligatory for any purpose, until the Certificate of Authentication hereon shall have been manually signed by the Registrar. IN WITNESS WHEREOF, the Colorado Housing and Finance Authority has caused this Bond to be executed in its name by the manual or facsimile signature of its Chair and its corporate seal (or a facsimile thereof) to be impressed or imprinted hereon and attested by the manual or facsimile signature of its Executive Director. COLORADO HOUSING AND FINANCE AUTHORITY By: _____________________________________ Chair (SEAL) Attest: Executive Director P69 III. A-6 CERTIFICATE OF AUTHENTICATION This Bond is the Bond described in the Financing Agreement referred to herein. Date of Authentication: ________________________ COLORADO HOUSING AND FINANCE AUTHORITY, as Registrar By: _____________________________________ Authorized Officer P70 III. B-1 EXHIBIT B INVESTOR LETTER To: Colorado Housing and Finance Authority RE: Colorado Housing and Finance Authority Multifamily Housing Revenue Bond (Aspen Country Inn Project) Series 2016 In connection with the purchase by the undersigned (the "Purchaser") of the captioned bond (the "Bond") issued pursuant to the terms of, and as defined in, the Financing Agreement dated as of July __, 2016 (the “Financing Agreement”) among the Colorado Housing and Finance Authority (the "Authority"), the City of Aspen, Colorado, a home rule municipality of the State of Colorado, as the original purchaser of the Bond, and ACI Affordable 1 LLLP, a Colorado limited liability limited partnership (the “Borrower”) relating to the Bond, the Purchaser hereby certifies, represents and warrants for the benefit of the Authority [as follows:] [INSERT FOR INVESTOR LETTER OTHER THAN INITIAL PURCHASER’S INVESTOR LETTER: that the Purchaser is either a “qualified institutional buyer” as defined in Rule 144A under the Securities Act of 1933, as amended (a “QIB”), or an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3), (4), (7) or (8) of Regulation D promulgated under the Securities Act of 1933) (an “Accredited Investor”), and hereby further acknowledges, represents, and warrants to, and agrees with, the Authority as follows:] A. The Purchaser is purchasing the Bond with its own funds (or with funds from accounts over which it has sole investment authority) and not the funds of any other person, and for its own account (or for accounts over which it has sole investment authority) and not as nominee or agent for the account of any other person and not with a view to any distribution thereof, other than the deposit or sale of the Bond in or to a custodial or trust arrangement each of the beneficial owners of which shall be required to be [a QIB or an Accredited Investor] [a “qualified institutional buyer” as defined in Rule 144A under the Securities Act of 1933, as amended (a “QIB”), or an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3), (4), (7) or (8) of Regulation D promulgated under the Securities Act of 1933) (an “Accredited Investor”)]. B. The Purchaser has such knowledge and experience in business and financial matters, including (i) the evaluation of residential real estate developments such as the Project (as defined in the Financing Agreement), (ii) the evaluation of the capabilities of persons such as the Borrower, and the manager of the Project to operate and maintain the Project, and (iii) the analysis, purchase and ownership of multifamily housing revenue bonds, tax-exempt securities and other investment vehicles similar in character to the Bond, so as to enable it to understand and evaluate the risks of such investments and form an investment decision with respect thereto, the Purchaser has no need for liquidity in such investment and the Purchaser is (or any account for which it is purchasing is) able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof. C. The Purchaser acknowledges that it has been provided with, and has had the opportunity to review, the Financing Agreement and all other documents relating to the P71 III. B-2 issuance of the Bond. The Purchaser has conducted its own investigation of the Project, the Borrower, the manager of the Project, the Bond, the Financing Agreement and related documents and the transactions relating thereto, to the extent it deemed necessary. The Purchaser has been offered an opportunity to have made available to it any and all such information it might request from the Authority, the Borrower and the manager of the Project. On this basis, it is agreed by the Purchaser that the Purchaser is not relying on the Authority or any other party or person to undertake the furnishing or verification of information related to the referenced transaction. D. In connection with the purchase of the Bond, the Purchaser has been advised that (i) the Authority has not undertaken steps to ascertain the accuracy, completeness or truth of any statements made or omitted to be made to the undersigned concerning any of the facts relating to the business, operations, financial condition, or future prospects of the Borrower or the manager of the Project, and (ii) the Authority has not made any representations concerning the accuracy or completeness of any information supplied to the undersigned by the Borrower or the manager of the Project. E. THE PURCHASER UNDERSTANDS THAT: 1. THE BOND IS A SPECIAL, LIMITED OBLIGATION OF THE AUTHORITY, PAYABLE SOLELY OUT OF THE REVENUES, RECEIPTS AND OTHER MONEYS PLEDGED THEREFOR UNDER THE FINANCING AGREEMENT. THE BOND SHALL NOT BE A DEBT OR INDEBTEDNESS OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF (INCLUDING THE AUTHORITY), AND NEITHER THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF SHALL BE LIABLE THEREON, NOR IN ANY EVENT SHALL THE BOND BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE AUTHORITY PLEDGED UNDER THE FINANCING AGREEMENT. THE BOND SHALL NOT CONSTITUTE AN INDEBTEDNESS OR A MULTIPLE FISCAL-YEAR FINANCIAL OBLIGATION WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. 2. THE AUTHORITY HAS NO TAXING POWER AND PRINCIPAL AND INTEREST ON THE BOND IS PAYABLE SOLELY OUT OF THE MONEYS TO BE RECEIVED BY THE AUTHORITY UNDER THE FINANCING AGREEMENT AND AMOUNTS ON DEPOSIT IN THE FUNDS AND ACCOUNTS ESTABLISHED AND PLEDGED UNDER THE FINANCING AGREEMENT. NEITHER THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF (EXCEPT THE AUTHORITY FROM THE SOURCES IDENTIFIED ABOVE) SHALL BE LIABLE FOR PAYMENT OF THE BOND NOR IN ANY EVENT SHALL PRINCIPAL OF AND INTEREST ON THE BOND BE PAYABLE OUT OF ANY FUNDS OR ASSETS OTHER THAN THOSE PLEDGED TO THAT PURPOSE BY THE AUTHORITY UNDER THE FINANCING AGREEMENT. F. The Purchaser understands that in connection with any proposed transfer or exchange of the Bond, there must be delivered to the Authority a letter of the transferee to substantially the same effect as this letter or otherwise as permitted under the Financing Agreement. P72 III. B-3 G. The Purchaser understands that, in connection with any proposed transfer of the Bond, such transfer must be limited to a QIB or an Accredited Investor that makes representations with respect to itself to substantially the same effect as the representations set forth herein. H. [INSERT FOR INVESTOR LETTER OTHER THAN INITIAL PURCHASER’S INVESTOR LETTER: Any Transferee of this Bond also understands that it shall indemnify the Authority as set forth in the Financing Agreement: “ANY TRANSFEREE SHALL AGREE TO INDEMNIFY THE AUTHORITY FROM AND AGAINST ANY AND ALL LIABILITY, COST OR EXPENSE (INCLUDING ATTORNEYS’ FEES AND EXPENSES) THAT MAY RESULT IF THE REPRESENTATIONS OF SUCH TRANSFEREE CONTAINED IN ITS INVESTOR LETTER ARE FALSE IN ANY MATERIAL RESPECT.”] All confirmations, affirmations, statements and provisions of the Purchaser in this Investor Letter are made solely and exclusively for the benefit of the Authority in connection with its purchase of the Bond. The Purchaser is aware of the significance to the Authority of the foregoing representations, and they are made with the intention that the Authority will rely on them. The foregoing representation shall survive the execution and delivery to the Purchaser of the Bond and the instruments and documents contemplated thereby. Very truly yours, ___________________________, Purchaser By_________________________________ Title:_______________________________ P73 III. RESOLUTION #__ (Series of 2016) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ASPEN CONCERNING THE ASPEN COUNTRY INN PROJECT AND APPROVING AND AUTHORIZING THE EXECTUTION OF A PARTNERSHIP AGREEMENT, A FINANCING AGREEMENT, AND A LOAN AGREEMENT AND AUTHORIZING THE PURCHASE BY THE CITY OF THE COLORADO HOUSING AND FINANCE AUTHORITY’S MULTIFAMILY HOUSING REVENUE BOND (ASPEN COUNTRY INN PROJECT) SERIES 2016, THE LOAN OF THE PROCEEDS THEREOF AND THE EXECUTION OF RELATED DOCUMENTS WHEREAS the provision of affordable housing is important to allow people who work in the City of Aspen (the “City”) and Pitkin County to live near where they work and to be part of the community; and WHEREAS, the Aspen Country Inn (the “Project”) is a 40 unit rental project located in the City; and WHEREAS, in order to obtain financing for the acquisition, rehabilitation and equipping of the Project, the City wishes to become the general partner in ACI Affordable 1 LLLP, a Colorado limited liability limited partnership (“ACI”); and WHEREAS, the Colorado Housing and Finance Authority (“CHAFA”) wishes to authorize the issuance of up to $7,600,000 principal amount of its Multifamily Revenue Bond (Aspen County Inn Project) Series 2016 (the “Bond”), and to use the proceeds thereof to provide a loan to ACI to pay a portion of the costs of the Project; and WHEREAS, there are on file with the City Clerk the proposed forms of the following documents (the “Documents”): (a) ACI Affordable 1 LLLP Agreement of Limited Partnership (the “Partnership Agreement”) creating ACI; and (b) Financing Agreement (the “Financing Agreement”) among the CHAFA, the Borrower and the City; and (c) Loan Agreement (the “Loan Agreement”) between the City and ACI; and WHEREAS, the City is willing to approve and authorize the purchase of the Bond and the execution and delivery of the Documents. P74 III. 2 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ASPEN: 1. The Council hereby determines that the provision of affordable housing such as the Project and, in connection therewith, the authorization and approval of the Documents and the purchase of the Bond, serves an important public purpose. 2. The financing of all or a portion of the costs of the Project through the City’s purchase of the Bond, is hereby authorized and approved. 3. The Documents, in substantially the forms on file with the City Clerk, are hereby approved. The Mayor, the City Manager and the Director of Finance, as required, are hereby authorized to execute such Documents and the City Clerk or the Deputy City Clerk is hereby authorized to affix the seal of the City thereto and to attest the same, as required. 4. The officers of the City are hereby authorized, empowered and directed to execute and deliver all such additional certificates, instruments, agreements and documents, pay all such fees, charges and expenses and to do all such further acts and things as may be necessary, or in the reasonable discretion of the person acting, desirable and proper to effect the purposes of this resolution and to cause compliance by the City with all the terms, covenants and provisions of the Documents binding upon the City. 5. No provision of this Resolution or of any of the Documents shall be construed or interpreted (i) to directly or indirectly obligate the City to make any payment in any fiscal year in excess of amounts appropriated for such fiscal year, (ii) as creating a debt or multiple fiscal year direct or indirect debt or other financial obligation whatsoever of the City within the meaning of the City Charter or Article X, Section 20 of the Colorado Constitution or any other constitutional or statutory limitation or provision. No provision of this Agreement or of any of the Documents shall be construed to pledge or to create a lien on any class or source of moneys of the City, nor shall any provision of this Agreement or of any of the Documents restrict the future issuance of any obligations of the City, payable from any class or source of moneys of the City. 6. All resolutions, or parts thereof, inconsistent herewith are hereby repealed to the extent only of the inconsistency. 7. This resolution shall take effect immediately. P75 III. 3 INTRODUCED, READ AND ADOPTED by the City Council of the City of Aspen on the 8th day of August, 2016. Steven Skadron, Mayor I, Linda Manning, duly appointed and acting City Clerk do certify that the foregoing is a true and accurate copy of that resolution adopted by the City Council of the City of Aspen, Colorado, at a meeting held, August 8, 2016. _____________________________________ Linda Manning, City Clerk 31850848v1 P76 III. 135350.2 ACI AFFORDABLE 1 LLLP AGREEMENT OF LIMITED PARTNERSHIP June 30, 2016 P77 III. 1 135350.2 ACI AFFORDABLE 1 LLLP AGREEMENT OF LIMITED PARTNERSHIP THIS AGREEMENT OF LIMITED PARTNERSHIP is entered into effective the 30th day of June, 2016, by and between City of Aspen, Colorado, a municipal corporation of the State of Colorado (the “General Partner”), and Aspen Pitkin County Housing Authority, a Colorado body corporate and politic (the “Limited Partner”). The Limited Partner and the General Partner are sometimes referred to individually as a “Partner” and collectively they are sometimes referred to as the “Partners.” In consideration of the mutual promises set forth below, the parties agree as follows: ARTICLE I FORMATION OF THE LIMITED PARTNERSHIP 1.1 Formation. The General Partners have caused a Certificate of Limited Partnership and a Statement of Registration for ACI Affordable 1 LLLP (the “Partnership”) to be filed with the Colorado Secretary of State. Subject to section 1.5, the parties hereby agree to operate the Partnership under the name ACI Affordable 1 LLLP upon the terms and conditions provided in this Agreement, subject to the provisions of the Colorado Uniform Limited Partnership Act of 1981, as amended (the “Act”). If there is a conflict between the provisions of this Agreement and the Act, the provisions of this Agreement shall control except that if the conflict is with respect to a provision that would cause the Partnership to be taxed as an association for federal income tax purposes, then the provisions of the Act shall control. The parties intend that the Partnership shall be taxed as a partnership. 1.2 Compliance With Laws. The General Partner, acting directly or through an attorney-in-fact shall execute such documents (including amendments to the Combined Certificate and Statement of Registration described above) and take such further action as shall be appropriate or helpful to comply with the requirements of law for the formation and operation of a limited liability limited partnership in Colorado, the counties therein, and all other states and counties where the Partnership elects to carry on its business. The General Partner shall not be required to deliver to the Limited Partner copies of the Partnership’s Certificate of Limited Partnership and Statement of Registration or any amendments thereto. 1.3 Business. The business of the Partnership shall be: (a) to acquire, develop, construct, own, operate, manage and maintain an affordable housing development located in Aspen, Colorado, to be known as Aspen Country Inn (the “Project”) in order to provide safe, decent and affordable housing for low-income persons and families; (b) to obtain financing and refinancing to accomplish the foregoing purposes; and (c) to do any and all other things necessary, desirable or incidental to the foregoing purposes. The Partnership may sell or otherwise dispose of all or substantially all of its assets as provided in this Agreement, and any such sale or disposition shall be considered to be within the scope of the Partnership’s business. P78 III. 2 135350.2 1.4 Principal Office; Agent. (a) The principal office of the Partnership shall be at 130 Galena Street, Aspen, Colorado 81611, or such other place in Colorado as the General Partner may select from time to time. (b) The Partnership’s agent for service of process, and its address, shall be City of Aspen, Colorado, 130 Galena Street, Aspen, Colorado 81611, or such other person or address as the General Partner may select from time to time. 1.5 Term. The Partnership shall commence on the date that the certificate of limited partnership is filed in the office of the Secretary of State of the State of Colorado and shall continue until terminated as provided in Article 11. ARTICLE II DEFINITIONS 2.1 Affiliate. An “Affiliate” of a Partner is a person or entity that controls, is controlled by or is under common control with such Partner. A person or entity that has a 20 percent or more interest, directly or indirectly, in another person or entity shall be conclusively deemed to be a controlling person. 2.2 Code. The Internal Revenue Code of 1986, as amended from time to time. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of future law. 2.3 Sharing Ratio. The “Sharing Ratio” of each Partner shall mean the percentage interest as follows: Limited Partner – 90.01 percent; General Partner – 9.99 percent. The Sharing Ratios of the Partners shall be adjusted from time to time as provided in section 10.1. 2.4 Treasury Regulations. Regulations issued by the Department of Treasury under the Code. Any reference herein to a specific section or sections of the Treasury Regulations shall be deemed to include a reference to any corresponding provision of future regulations under the Code. ARTICLE III CAPITAL CONTRIBUTIONS 3.1 Initial Capital Contributions. Upon execution of this Agreement, the General Partner and the Limited Partner shall each contribute $100.00 to the capital of the Partnership. 3.2 Additional Capital Contributions. Additional contributions to the Partnership shall be made only upon the consent of all Partners. 3.3 Interest on Capital Contributions. No Partner shall be entitled to interest on its capital contributions. P79 III. 3 135350.2 3.4 Right to Enforce. No person other than a Partner shall have the right to enforce any obligation of a Partner to contribute capital or lend funds hereunder and specifically no lender or other third party shall have any such rights. ARTICLE IV ACQUISITION AND FINANCING OF THE PROJECT 4.1 Acquisition of the Project. The General Partner is authorized to execute any and all agreements, assignments or other documents or instruments considered necessary or desirable in connection with the acquisition of the property for the Project. 4.2 Financing. The Partnership is authorized to obtain such financing as the General Partner considers appropriate on behalf of the Partnership in connection with the acquisition, rehabilitation and operation of the Project, including without limitation construction loans, permanent financing, and bridge financing. In connection with any and all financing transactions, the General Partner is authorized to execute and deliver any and all loan agreements, deeds of trust, financing statements, pledges or other documents and instruments necessary or desirable in connection with such financing. ARTICLE V DISTRIBUTIONS 5.1 Distributable Cash. The General Partner shall from time to time determine the amount of cash available for distribution to the Partners, taking into account the need for reserves to cover operating deficits, capital improvements and anticipated liabilities. 5.2 Cash Distributions. All cash available for distribution to the Partners shall be allocated in accordance with Sharing Ratios. ARTICLE VI ALLOCATION OF PROFIT AND LOSS 6.1 Determination of Profit and Loss. This Article provides for the allocation among the Partners of the profits and losses of the Partnership for purposes of crediting and debiting the capital accounts of the Partners. All items of profit or loss shall be determined on an annual basis, and for such other periods as may be determined appropriate by the General Partner. 6.2 Allocation of Profit and Loss. All items of profit and loss shall be allocated in accordance with Sharing Ratios. ARTICLE VII ALLOCATION OF TAXABLE INCOME AND TAX LOSSES 7.1 In General. (a) Except as provided in sections 7.1(b) and 7.2, each item of income, gain, loss and deduction of the Partnership for federal income tax purposes shall be allocated among the Partners in the same manner as such item is allocated for book purposes under Article VI. P80 III. 4 135350.2 (b) To the extent of any recapture income (as defined below) resulting from the sale or other taxable disposition of a Partnership asset, the amount of any gain from such disposition allocated to (or recognized by) a Partner for federal income tax purposes pursuant to sections 7.1(a) or 7.2 shall be deemed to consist of recapture income to the extent such Partner has been allocated or has claimed any deduction directly or indirectly giving rise to the treatment of such gain as recapture income. For this purpose “recapture income” shall mean any gain recognized by the Partnership (but computed without regard to any adjustment required by sections 734 and 743 of the Code) upon the disposition of any property or asset of the Partnership that does not constitute capital gain for federal income tax purposes because such gain represents the recapture of deductions previously taken with respect to such property or assets. 7.2 Allocation of Section 704(c) Items. The Partners recognize that with respect to property contributed to the Partnership by a partner and with respect to property revalued in accordance with Treasury Regulation § 1.704-1(b)(2)(iv)(f) (referred to as “Adjusted Properties”), there will be a difference between the agreed values or Carrying Values, as the case may be, of such property at the time of contribution or revaluation, as the case may be, and the adjusted tax basis of such property at that time. All items of tax depreciation, cost recovery, amortization and gain or loss with respect to such contributed properties and Adjusted Properties shall be allocated among the Partners to take into account the book-tax disparities with respect to such properties in accordance with the provisions of sections 704(b) and 704(c) of the Code and the Treasury Regulations under those sections. Any gain or loss attributable to a contributed property or an Adjusted Property (exclusive of gain or loss allocated to eliminate such book-tax disparities) shall be allocated in the same manner as such gain or loss would be allocated for book purposes under Article VI. 7.3 Integration With Section 754 Election. All items of income, gain, loss, deduction, credit and basis allocations recognized by the Partnership for federal income tax purposes and allocated to the partners in accordance with the provisions hereof shall be determined without regard to any election under section 754 of the Code that may be made by the Partnership; provided, however, such allocations, once made, shall be adjusted as necessary or appropriate to take into account the adjustments permitted by sections 734 and 743 of the Code. 7.4 Allocation of Tax Credits. All low income housing tax credits with respect to any building owned by the Partnership shall be allocated in the same fashion as the depreciation deductions with respect to the building are allocated. All other tax credits, including the investment tax credit, with respect to the Partnership’s property or operations shall be allocated in the manner required by the Code or the Regulations to obtain the maximum aggregate benefit from the credit, or otherwise in the same manner as the expenditures or other deductions giving rise to the credit are allocated under this Agreement. ARTICLE VIII MANAGEMENT POWERS 8.1 Limited Liability. The liability of the Limited Partner shall be limited as set forth in the Act. Except as permitted by Colorado law and section 8.3, the Limited Partner shall take P81 III. 5 135350.2 no part in the control, management, direction or operation of the affairs of the Partnership and shall have no power to bind the Partnership. The General Partner may from time to time seek suggestions and expressions of opinion from the Limited Partner on major policy decisions, but need not act on such advice, and at all times the sole control and management of the Partnership shall rest with the General Partner, subject to the provisions of this Article VIII. 8.2 Management Authority. (a) Except as otherwise provided in this Article VIII, the General Partner is hereby expressly authorized on behalf of the Partnership to make all decisions with respect to the Partnership’s business and to take all actions to carry out such decisions. Without limiting the generality of the foregoing, the General Partner is authorized to make all decisions and to take all actions with respect to the operation, management, and maintenance of all or any part of the Project and the disposition of property in the ordinary course of business, subject to any required consent under section 8.3. (b) After execution of this Agreement, all documents executed on behalf of the Partnership must be signed by the General Partner, including (i) all deeds, assignments, leases, subleases, management and maintenance contracts; (ii) all checks, drafts and other orders for the payment of Partnership funds; (iii) all promissory notes, mortgages, deeds of trust, security agreements, financing statements and other similar documents; and (iv) all other instruments of any kind or nature relating to the affairs of the Partnership whether like or unlike the foregoing. (c) The General Partner may cause the Partnership to enter into any transactions or agreements with Partners (including the General Partner) or its Affiliates (in addition to the agreements described in section 8.4) for goods and services without the prior approval of all Partners. 8.3 Approval of Other Partners. Without the prior written approval of the Limited Partner, the General Partner shall not cause the Partnership to acquire any assets or conduct any activity other than as described in Section 1.3. 8.4 Management, Development and License Agreements. The General Partner is authorized on behalf of the Partnership to enter into such management agreements, development agreements, franchise agreements and other agreements appropriate or helpful to carry out the business of the Partnership, including without limitation, agreements with Affiliates of the Partnership. 8.5 Time Devoted to Business. The General Partner shall devote such time to the business of the Partnership as is reasonably necessary for the efficient carrying on of the Partnership’s business. 8.6 Information Relating to Partnership. Upon request, the General Partner shall supply to any Partner any information reasonably requested regarding the Partnership or its activities, provided that obtaining the information is not unduly burdensome to the General Partner. During ordinary business hours, and at the reasonable convenience of the General Partner, any Partner or its authorized representative shall have access to all books, records and P82 III. 6 135350.2 materials regarding the Partnership and its activities, and the General Partner shall make all reasonable attempts to provide access to books, records and materials not otherwise in the General Partner’s possession. 8.7 Exculpation. In carrying out their duties hereunder the Partners shall not be liable to the Partnership nor to any Partner for their good faith actions, or failure to act, nor for any errors of judgment, nor for any act or omission believed in good faith to be within the scope of authority conferred by this Agreement, but only for willful misconduct or gross negligence in the performance of their obligations under this Agreement. The Partnership shall indemnify and hold harmless each of the Partners and their officers, directors, partners, agents, employees and Affiliates as to third parties against and from any personal loss, liability or damage incurred as a result of any act or omission of any Partner believed in good faith to be within the scope of authority conferred by this Agreement, except for willful misconduct or gross negligence, but not in excess of the value of the assets of the Partnership as of the date the General Partner learns of such act or omission resulting in the personal loss, liability or damage to a third party (the “Date of Notice”). In all cases, indemnification shall be provided only out of and to the extent of the assets of the Partnership as of the Date of Notice, and no individual Partner shall have any personal liability whatsoever on account thereof. In no event shall the Partnership be liable to a third party under this section 8.7 for the amount of any additional contributions made to the Partnership after the Date of Notice or for the amount of any increase in value of any Partnership assets after the Date of Notice. Notwithstanding the foregoing, the Partnership’s indemnification of the Partners and their officers, directors, agents and employees as to a third party shall be only with respect to such loss, liability or damage that is not otherwise compensated for by insurance carried for the benefit of the Partnership. 8.8 Insurance. The General Partner shall maintain in force at all times for the protection of the Partnership and all Partners to the extent of their insurable interests such insurance as it believes is warranted for the operations being conducted. 8.9 Other Activities. Each Partner shall at all times be free to engage and possess an interest in any business or venture for its own account, including without limitation the formation of partnerships, joint ventures and corporations, which business or venture may directly or indirectly compete with the business of the Partnership. 8.10 Reliance by Third Parties. No third party dealing with the Partnership shall be required to ascertain whether the General Partner is acting in accordance with the provisions of this Agreement. Such third parties may rely on documents executed by the General Partner as binding the Partnership. The foregoing provisions of this section 8.10 shall not apply to third parties who are Affiliates of a Partner. 8.11 Tax Matters Partner. Pursuant to section 6231(a) of the Code, the General Partner is hereby designated as the tax matters partner for the Partnership. The General Partner is expressly authorized to perform, on behalf of the Partnership or any Partner, any act that may be necessary to make this designation effective under any regulation, ruling, procedure or instruction that may be issued by the Internal Revenue Service. P83 III. 7 135350.2 8.12 Duties of General Partner. (a) The General Partner shall carry out its duties as General Partner hereunder in a diligent and workmanlike manner, in accordance with sound business practices and consistent with the fiduciary duties partners owe to each other, and shall use its best efforts to employ and engage qualified personnel in furthering the purposes of the Partnership. (b) The General Partner may delegate any or all of its duties under this section 8.12. 8.13 Fees and Reimbursements. (a) No Partner shall be entitled to any management fee or salary for managing the operations of the Partnership. (b) The General Partner shall be reimbursed by the Partnership for all reasonable out-of-pocket costs incurred by it in the organization and management of the Partnership, including fees and costs for legal, accounting and administrative services. ARTICLE IX ACCOUNTING AND REPORTING 9.1 Books. The General Partner shall maintain complete and accurate books of account of the Partnership’s affairs at the principal office of the Partnership. The Partnership’s books shall be kept on the accrual basis of accounting. The Partnership’s accounting period shall be the calendar year ending December 31. 9.2 Capital Accounts. (a) The General Partner shall maintain a separate capital account for each Partner and such other Partner accounts as may be necessary or desirable to comply with the requirements of applicable laws and regulations, including the Treasury Regulation issued under Section 704 of the Code. 9.3 Transfers During Year. In order to avoid an interim closing of the Partnership’s books, the share of profits and losses under Article VI of a Partner who transfers part or all of its interest in the Partnership during the Partnership’s accounting year may be determined by taking its pro rata share of the amount of such profits and losses for the year and the balance of the profits and losses attributable to the Partnership interest transferred shall be allocated to the transferee of such interest. The proration shall be made by the General Partner after consultation with the accountants for the Partnership and may be based on the portion of the Partnership’s accounting year which has elapsed prior to the transfer or may be determined under any other reasonable method; provided, however, that any income or loss arising from the sale of property other than in the ordinary course of business shall be allocated to the owner of the Partnership interest at the time such income or loss was realized. 9.4 Reports. The General Partner shall deliver to each Partner annual statements on the Partnership’s operations at the end of each fiscal year. The books of account shall be closed promptly after the end of each fiscal year. As soon as practicable thereafter, the General Partner shall make a written report to each Partner which shall include a statement of receipts, expenditures, profits and losses, and such additional statements with respect to the status of the Partnership’s assets and the distribution of Partnership funds as are necessary to advise all P84 III. 8 135350.2 Partners properly about their investment in the Partnership. Prior to March 1st of each year each Partner shall also be provided with sufficient information as is necessary to allow it to file its own income tax return for the preceding year. 9.5 Section 754 Election. If requested by a Partner the Partnership shall make the election provided for under section 754 of the Code. Any costs attributable to making such election shall be borne solely by the requesting Partner. ARTICLE X TRANSFER OF PARTNER’S INTEREST 10.1 General Partner. Notwithstanding anything to the contrary contained herein, without the prior written approval of all of the Partners, no additional general or limited partner shall be admitted to the Partnership and the General Partner shall not substitute a successor General Partner in its stead. ARTICLE XI TERM; WITHDRAWAL, DISSOLUTION OR BANKRUPTCY OF A PARTNER 11.1 Events of Dissolution. (a) The Partnership shall continue until December 31, 2035, unless sooner dissolved by (i) determination of the General Partner to dissolve the Partnership, or (ii) by the withdrawal, dissolution, bankruptcy or termination of a General Partner (unless the Partnership is continued under section 11.1(b) below) or (iii) any other event causing dissolution of a limited partnership under the Act. For purposes of this Agreement: a Partner shall be considered bankrupt if an order for relief under Chapter 7 of the Bankruptcy Reform Act of 1978 has been entered against him; and a General Partner that is a partnership shall be considered dissolved only if the General Partner commences winding up and termination of its business after an event of dissolution. (b) Upon the withdrawal, dissolution, bankruptcy, or termination of the General Partner, the Partnership shall be dissolved unless within 90 days after the occurrence of such event all of the remaining Partners agree in writing to continue the business of the Partnership and to the appointment of one or more additional General Partners if necessary or desired, under an agreement containing the terms and conditions set forth in this Agreement, with such amendments as may then be adopted. 11.2 Limited Partners. Except as expressly provided otherwise in this Agreement, a Limited Partner shall have no power to withdraw from or terminate his membership in the Partnership, and the Limited Partners shall have no power to dissolve the Partnership. Upon withdrawal pursuant to the provisions of this Agreement, a Limited Partner shall have no right to receive any value for his interest in the Partnership except as expressly provided in this Agreement. 11.3 Withdrawal of General Partner. Notwithstanding the provisions of section 11.1 with respect to the withdrawal, dissolution or bankruptcy of a General Partner, the General Partner covenants and agrees that it will not withdraw from the Partnership or take any voluntary P85 III. 9 135350.2 action in bankruptcy or any voluntary action to dissolve itself prior to the sixteenth anniversary date of the commencement of the Partnership. If the General Partner violates this covenant and agreement, the wrongful withdrawal, bankruptcy or dissolution shall be effective for purposes of this Article XI, but such Partner shall be liable for damages to the other Partners and to the Partnership for such wrongful withdrawal, bankruptcy or dissolution. 11.4 Waiver of Appraisal, Valuation Rights and Partition. In the event of the withdrawal, dissolution or bankruptcy of any Partner, the rights of the Partner or its successors and assigns under applicable Colorado law with respect to the inventory of assets, appraisals, accounting or sale of assets shall not apply and are hereby expressly waived by all Partners. Each Partner expressly agrees that the provisions contained in this Agreement shall bind and control its successors and assigns, including without limitation, the provisions applicable in the event of the withdrawal, dissolution or bankruptcy of a Partner. Each of the Partners hereby waives any and all rights, duties, obligations and benefits with respect to any action for partition of the Partnership property, or to compel any sale thereof. ARTICLE XII DISSOLUTION AND TERMINATION 12.1 Final Accounting. In case of the dissolution of the Partnership, a proper accounting shall be made as provided in section 9.4 from the date of the last previous accounting to the date of dissolution. 12.2 Liquidation. (a) Upon the dissolution of the Partnership, the General Partner, or, in the case of its dissolution, insolvency, bankruptcy or withdrawal, the other General Partner or (if none) some person selected by the Partners whose Sharing Ratios total 51 percent or more of the total Sharing Ratios of all the remaining Partners, shall act as liquidator to wind up the Partnership. Subject to the required consent of other Partners under section 8.3, the liquidator shall have full power and authority to sell, assign and encumber any or all of the Partnership’s assets and to wind up and liquidate the affairs of the Partnership in an orderly and businesslike manner. All proceeds from liquidation shall be distributed in the following order of priority: (i) to the payment of debts and liabilities of the Partnership and the expenses of liquidation, including any advances to the Partnership by any Partner to the extent such advances have not been reimbursed previously; (ii) to the setting up of such reserves as the liquidator may reasonably deem necessary for any contingent liabilities of the Partnership; and (iii) to the Partners in accordance with Article V. (b) In the event that any Partner’s capital account balance is a negative amount after all allocations to such account in accordance with Article VI and distribution in accordance with section 12.2(a), such Partner shall have no obligation to contribute any amount to the Partnership as a result of such negative capital account. 12.3 Distribution in Kind. If a portion of the Partnership’s assets is to be distributed in kind to the Partners, the liquidator, with the approval of the Partners possessing a majority-in- interest of the Sharing Ratios, shall obtain an independent appraisal of the fair market value of each such asset at a date reasonably close to the date of liquidation. Any unrealized appreciation P86 III. 10 135350.2 or depreciation with respect to such assets shall be allocated among the Partners in accordance with the provisions of Article VI as if the assets had been sold for the appraised value and taken into consideration in determining the balance in the Partners’ capital accounts as of the date of liquidation. Distribution of assets in kind shall be made to the Partners in the order of priority set forth in section 12.2 as if the assets had been sold for the appraised value. Distribution of any asset in kind to a Partner shall be considered a distribution of an amount equal to the asset’s fair market value for purposes of section 12.2. Except as otherwise determined by the liquidator pursuant to this section 12.3, no Partner shall have any right to receive distributions of property, other than cash, from the Partnership. 12.4 Waiver of Right to Court Decree of Dissolution. The Partners agree that irreparable damage would be done to the Partnership if any Partner brought an action in court to dissolve the Partnership. Accordingly, each of the Partners accepts the provisions of this Agreement as its sole entitlement on termination of his membership in the Partnership. Each Partner hereby waives and renounces its right to seek a court decree of dissolution or to seek the appointment by a court of a liquidator for the Partnership. 12.5 Cancellation of Certificate. Upon the completion of the distribution of Partnership assets as provided in this Article XII, the Partnership shall be terminated, and the person acting as liquidator (or the General Partner if necessary) shall cause the cancellation of the Partnership’s certificate of limited partnership and shall take such other actions as may be necessary to terminate the Partnership. ARTICLE XIII GENERAL PROVISIONS 13.1 Entire Agreement. This agreement embodies the entire understanding and agreement among the parties concerning the Partnership and supersedes any and all prior negotiations, understandings or agreements in regard thereto. 13.2 Amendment. This Agreement may not be amended nor may any rights hereunder be waived except by an instrument in writing signed by the party sought to be charged with such amendment or waiver. 13.3 Applicable Law. This agreement shall be construed in accordance with and governed by the laws of the State of Colorado. 13.4 Pronouns. References to a Partner, including by use of a pronoun, shall be deemed to include masculine, feminine, singular, plural, individuals, partnerships or corporations where applicable. 13.5 Counterparts. This instrument may be executed in any number of counterparts each of which shall be considered an original. 13.6 Additional Documents. The Partners hereto covenant and agree to execute such additional documents and to perform additional acts as are or may become necessary or convenient to carry out the purposes of this Agreement. P87 III. 11 135350.2 13.7 Written Consents. All consents or approvals required or permitted under this Agreement shall be in writing. 13.8 Method of Notices. All notices required or permitted by this Agreement shall be in writing and shall be hand delivered or sent by registered or certified mail, postage prepaid, addressed as set forth on the signature page hereof (except that any Partner may from time to time give notice changing his address for that purpose) and shall be effective when personally delivered, or, if mailed, on the date set forth on the receipt of registered or certified mail, or on the fifth day after mailing, whichever is earlier. 13.9 Computation of Time. In computing any period of time under this Agreement, the day of the act, event or default from which the designated period of time begins to run shall not be included. The last day of the period so computed shall be included, unless it is a Saturday, Sunday or legal holiday, in which event the period shall run until the end of the next day which is not a Saturday, Sunday or legal holiday. P88 III. 12 135350.2 IN WITNESS WHEREOF the parties have executed this Agreement on the dates stated below their signatures. GENERAL PARTNER: CITY OF ASPEN, COLORADO By: Name: Title: Address: 130 Galena Street Aspen, CO 81611 Date: June ___, 2016 LIMITED PARTNER: ASPEN PITKIN COUNTY HOUSING AUTHORITY By: Name: Address: 130 Galena Street Aspen, Colorado 81611 Date: June ___, 2016 P89 III. P90 III. P91 III. P92 III. P93 III. P94 III. P95 III. P96 III. P97 III. P98 III. P99 III. P100 III. P101 III.