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Mike Mornson <br />Development Agreement— Phase III Silver Lake Village Redevelopment <br />August 30, 2010 <br />Page 3 <br />Other requests of the developer <br />The developer was of the opinion that if the above deal points were implemented, they would receive little if <br />any profit from Phase IA. In addition they were of the opinion that there wasn't much of an incentive to <br />them to make sure that all portions of Phase 111 were implemented (they want to be able to make up for <br />approximately $2 million loss as Master Developer). In light of this, they requested the Council consider the <br />following three additional deal points: <br />Any increment not needed for development of the Phase 1116 or Phase IIIC development be split 75/25 <br />between the City and developer (previous deal point was 100% until City is repaid, then 100% to <br />developer) <br />2. The City issue a subordinated TIF note to the developer ( "C" note), payable from TIF not needed to pay <br />debt service on the commercial TIF revenue bonds once the City is reimbursed 100% for their $2.6 <br />million capital outlay; and <br />3. Extend the term of the Agreement from 18 months (December 31, 201 1) to another date (i.e. additional 6 <br />months or a year). <br />Review of options for default of agreement versus new agreement <br />The confidential, attorney - client privileged memorandum dated February 22, 2010 from Dorsey & Whitney <br />will be provided to the Council again under separate cover. This memorandum was provided to the City <br />Council and discussed at a March 1, 2010 work session. From this work session, staff was given direction to <br />work with the developer to negotiate a new agreement. <br />In addition, staff met with Council at their work session on April 12, 2010. From this work session, the City <br />sent the attached letter to the developer on April 13, 2010. The developer did respond by the required April <br />30, 2010 date and that's when formal negotiations for the terms of the proposed Phase III agreement began. <br />Please contact me at 651- 697 -8506 with any questions. <br />cc: Jay Lindgren — Dorsey & Whitney <br />File <br />