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Option 2: Make lump sum payment on principal balance at end of the TIF Note (8/1/03). • The positives are that the principal on the TIF Note is paid off,the Developer is satisfied,the City saves at least $4,075 in interest on the Note, and it would be possible to decertify two parcels, thereby fulfilling the desire of the EDA to return revenue to the respective taxing jurisdictions. The negatives include paying out an additional $40,739.26 than what is required from a valid Development Agreement, the City is paying ahead of tax increment from the respective parcels, the accelerated payment on principal would slowdown (modestly)the interfund loan repayments, and, by making the Developer whole for this project, may increase the likelihood that Everest will request similar treatment for Building N. Option 3: Extend the term of the TIF Note by three years (8/1/06). The positives are that the principal on the TIF Note is paid off (most likely in two years), the Developer is probably satisfied, the City has approved a reasonable extension of the Note and is not paying ahead of increment, and may provide the City a better negotiating position relative to other projects (i.e. Bldg. N). The negatives include paying out an additional $44,814.71+ than what is required from a valid Development Agreement, and, by making the Developer whole for this project, may still increase the likelihood that Everest will request similar treatment for Building N. Option 4: Leave Agreement as-is—Expires on 8/1/03. The positives include not having to pay out any additional sums to the Developer than what is required from the current Development Agreement(approx. $17,228.43 due in 2003), the City's position does not affect the building's owner (C.G. Hill & Sons), does not set a precedent for • other TIF agreements, and, by not acquiescing to Everest, enforces a legal document that clearly places the risk on the Developer. The negatives of this include not paying off the principal of a Note for a publicly-supported project, may invite legal action, and the Developer will be dissatisfied and may choose not to do other development/redevelopment projects in the City. Recommendation: At this time Staff is requesting guidance and input from the City Council on what actions they prefer regarding this request. Aaron Backman, Economic Development Coordinator (763) 717-4029 • N:\DATA\GROUPS\ECONDEV\Eda\Staff Reports\Staff 02\7-1 WS Item#5.doc 3