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Memo To: Mike Momson — City Manager From: Stacie Kvilvang Date: August 30, 2010 Subject: Development Agreement — Phase III Silver Lake Village Redevelopment At the August 10, 2010 City Council meeting, the Council requested a work session regarding the Phase III Development Agreement. At the meeting Council provided staff direction on the following proposed deal points: 1. Further refinement of the definition of commencement of construction 2. Priority of repayment to City for the Fannie Mae loan with regards to the Phase IA make up note III addition, Council wanted to review its options again for pursuing a default action on the existing agreements versus the current option of executing a new agreement. As you recall, the proposed Phase III agreement would cover the following proposed developments: Parcel New Phase Development Development Valuation Vacant Apache Office Site x Phase IIIA 80 to 100 Senior Apt $5.6 to $7 Million JA Cadawallader Office Site 40 Senior Co-Op $4.8 Million Baker's Square Parkin Phase II1B 51000 to 10,000 Sq /Ft Commercial $4.2 to $5.6 Million Vacant Don's Car Wash Site Fuel Mart and Fuel Mart Car Wash Phase IIIC 80 to 100 Unit Senior Continuum of Care $5.6 to $7 Million TOTAL N/A N/A $20.2 to $24.4 Million * 'Phis phase could consist of one development of 100 to 120 senior apartments as well On August 19 °i and 23`d staff met with the developer to discuss the proposed deal points in question and proposed resolution. Further refinement of definition of commencement of Construction: As you recall, the current agreement states that they have until December 31, 2011 to "commence construction" on any one of the three above referenced developments. The current language stated that the definition of commence construction was pulling a building permit for a particular phase. The reason that pulling a building permit was the definition was the developer was concerned that if they had all approvals from the City and those approvals were finalized in November or December, they may want to wait until spring to begin construction to avoid difficulties and additional costs associated with construction in the winter. If they waited until spring, they technically would be in default under the new agreement if the definition meant beginning of actual construction. 3060 Centre Pointe Drive 10 E H L E RS Roseville, MN 55113 -1105 LEADERS IN PUBLIC FINANCE Phone: 651- 697 -8506 Fax: 651- 697 -8555 skvilvang@ehlers-inc.com