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AUG. 28. 2002 11:30AM EHLERS & ASSOCIATES NO.4597 P.3 of Please note the various development assumptions for the remainder of TIP District No 3 -2. The 30,000 s.£ under e /restau•antproposed is by Mr. Sherman, together with the new bank building, and the new ding store Mr. Sherman has indicated that he could potentially construct up to 20,000 s.f. of additional commercial development on the remaining property, which would mean an additional $36,000 per year in tax increment. We have not counted this increment in the Exhibit 2 but it is shown in Exhibit 3. With this incre pooling over time is necessary from other districts., meat, no In case the additional commercial development does not occur, we also included TIF from District No. 2 -1 up front totaling $200,000 and future estimates of available increment after a portion of the existing debt is paid. Because this district is an older redevelopment district, no special authority is necessary to pool the fonds for District No. 3 -2. We will need to further review over time as the bonds for District No, the availability tter for the City increment to from this district 5 increment to cover an 2-1 are paid. It may be better for the City to utilize District No. 1 -5 any shortfalls because District No. 1 -5 has more restrictions on the use of funds. We also mentioned the potential for pooling from District No. 1 -5 after the a Presbyterian Homes is paid. This pooling authority is only allowed b Revenue for pay-as-you-go note to purposes of up current year shortfalls due to class rate compress on the De to pursue th is option, we will need to discuss with the Department of Revenue our specific facts to determine if the City will be approved compression. If the City desires if e City ty w pproved for pooling authority in the future. The program is only for debt issued prior to August, Please note that this is not a state grant but only permission to use TIF for another without regard to rules such as housing affordability factored in any further from one City district Y rther infrastructure costs or de Y and the five year rule. We also demolition and site improvement costs. have not Development Agreement Implications Mr. Sherman has not yet received in writing a commitment from U.S. Bank to begin construction on the new building, nor has he pre - leased the initial 30,000 s.f. of commercial property on Little Canada Road, Considerations for the development agreement to protect the city's interests include several options: 1 Require Mr, Sherman to construct a minimum number of s.f of commercial and /or guarantee tax increment from the parcels sold to him whether ornot the buildings are built, in an amount necessary to meet the Cit 2 Y's debt obligation. if a minimum level of commercial is not constructed by the end of 2004, require Mr. Sherman to finance the townhome tax increment with a revenue note at a higher rate and then make u shortfall with cash in the $1,000,000 promised third payment. 3. Reviewtheo up any opportunity to use apay- as- you -go note to Mr. Sherman for certain costs such as the U.S. Bank building relocation and the Delonais property, This note would be sufficient. This would likely limit the City's ability to pool from other districts and pledge increment for other projects in the district, but would limit the City's downside exposure. paid only if increment is The absence of any new debt means that we will not need to be concerned with the 5 year rule as long as it does not exceed $IM in net proceeds. We will need to review the issue of usin redevelopment district requirements for eliminating blighted property. g increment to meet the We realize that these scenarios have made assumptions which will need to be verified and refined. We look forward to discussing them further.