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City Council Regular Meeting Minutes 07 September 9, 2.003 Page 6 1 Ms. Kvilvang noted the developer of the For Sale housing units anticipated a 12%profit on the 2 development. She explained, once the developer obtained this profit margin, a"pay back" 3 would be provided to the City, which would be a prorated share of this profit, and, if the project 4 profit exceeded 15%, the City's prorated share of the profit would be increased. She added the 5 proration of the profit sharing was still being negotiated and would be finalized by the next 6 Council meeting. 7 8 Ms. Kvilvang indicated a mutually agreed-upon preliminary development proformas for the For 9 Sale housing and commercial development would be attached as an exhibit to the Development 10 Agreement. She stated this would be the basis for determination of assistance for the 11 developments and the actual development proformas would be compared with the preliminary 12 development proformas when the developments were completed. She explained, if the projects 13 performed better than anticipated and the For Sale Developer received the required profit amount 14 of 12% and the Commercial Developer met the construction and lease goals, the excess proceeds 15 would be disbursed to the City as excess TIF and would be made available for Phase II and 16 Phase II developments within the TIF district. 17 18 Ms. Kvilvang stated the City would use its best efforts to obtain LCDA and Tax Base 19 Revitalization grant funding and any other available funding from Metropolitan, State and 20 Federal sources. 21 22 Ms. Kvilvang stated the purchase price of land for each use would be reviewed and must be 23 shown to be at market and similar to what other projects were paying. 24 25 Mr. Mornson asked if the TIF note being discussed was $7.5 million to $9 million. Ms. 26 Kvilvang responded three notes would probably be involved, as they would be based on the 27 individual components. 28 29 Mr. Mornson asked if she was proposing approximately$7.5 million. Ms. Kvilvang stated that 30 was correct. 31 32 Mr. Mornson asked if the City would have increments pay for any cost overrun. Ms. Kvilvang 33 stated that was correct. 34 35 Mr. Mornson asked who made payments on the first two years of the Fannie Mae loans. Ms. 36 Kvilvang responded the loans would be negotiated so payment would not be needed the first two 37 years. 38 39 Mr. Mornson asked if the purpose of the general obligation of the City was to give Fannie Mae 40 security. Ms. Kvilvang responded that was correct. She added it was the City saying they would 41 pay the tab if needed. 42 43 Ms. Kvilvang stated the City had a great development opportunity with an excellent 44 development team. 45 46 Councilmember Faust stated many items had been"hammered out"in the last two weeks and he 47 felt"we are almost there." He noted Council's concern regarding the general obligation should