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CITY OF ST. ANTHONY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2016 E. PAY-AS-YOU-GO TAX INCREMENT The City has three tax increment pay-as-you-go agreements. The agreements are not a general obligation of the City and are payable solely from available tax increment. Accordingly, these agreements are not reflected in the financial statements of the City. Details of the pay-as-you-go notes are as follows: TIF District #3-5, Landings at Silver Lake Village: Issued in 2004 in the principal sum of $4,464,407 with an interest rate of 6.75% per annum. Principal and interest shall be paid on February 1 and August 1 thereafter to and including February 1, 2029. Payments are payable solely from available tax increment derived from the developed/redeveloped property and paid to the City. The pay-as-you-go note provides for payment to the developer equal to 90% of all tax increment received in the prior six months. The payment reimburses the developer for public improvements. The City shall have no obligation to pay any unpaid balance of principal or accrued interest that may remain after the final payment on February 1, 2029. The current year abatement (TIF note payments) amount to $515,270. At December 31, 2016, the principal amount outstanding on the note was $4,176,310. TIF District #3-5, Phase II Town Homes: Issued in 2006 in the principal sum of $937,520 with an interest rate of 6% per annum. Principal and interest shall be paid on February 1 and August 1 thereafter to and including August 1, 2031. Payments are payable solely from available tax increment derived from the developed/redeveloped property and paid to the City. The pay-as-you-go note provides for payment to the developer equal to 95% of all tax increment received in the prior six months. The payment reimburses the developer for public improvements. The City shall have no obligation to pay any unpaid balance of principal or accrued interest that may remain after the final payment on August 1, 2031. The current year abatement (TIF note payments) amount to $55,463. At December 31, 2016, the principal amount outstanding on the note was $937,520. TIF District # 3-5, The Legends Issued in 2016 in the principal sum of $1,023,000 with an interest rate of 5% per annum. Principal and interest shall be paid on February 1 and August 1 thereafter to and including February 1, 2028. Payments are payable solely from available tax increment derived from the developed/redeveloped property and paid to the City. The pay-as-you-go note provides for payment to the developer equal to 90% of all tax increment received in the prior six months. The payment reimburses the developer for public improvements. The City shall have no obligation to pay any unpaid balance of principal or accrued interest that may remain after the final payment on February 1, 2028. The current year abatement (TIF note payments) amount to $56,905. At December 31, 2016, the principal amount outstanding on the note was $966,095. F. ARBITRAGE The City issued greater than $5 million of bonds in the years 2006, 2007 and 2011 and, therefore, is required to rebate excess investment income relating to these issues to the federal government. The City calculates arbitrage rebate every five years as permitted by arbitrage regulations. The extent of the City’s liability for arbitrage rebates for bond issues not currently requiring five year rebate 82