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Oro: G From: LU Date: Subject: tiyt, EHLERS 49 & ASSOCIATES INC Mike Morrison — City Manager Stacie Kvilvang — Ehlers and Associates May 22, 2007 Request For Extension of Fannie Mae Loan On December 19, 2003, the City Council and Housing and Redevelopment Authority (HRA) executed a Development Agreement with Apache Redevelopment LLC for the redevelopment of the Apache Plaza Area. According to Section 12.11 of the Development Agreement, the City agreed to secure an interim loan in the amount of $3,350,000 from Fannie Mae, to assist in acquiring three (3) commercial properties where the Phase IA and Phase 113 for -sale housing would be developed (condominiums). On June 8, 2004, the City approved entering into an agreement with Fannie Mae to procure these funds and on August 27, 2004 the City and Fannie Mae executed a Credit Facility Contract for the funds. The term of the loan is for three (3) years and is due and payable in full on or before August 27, 2007 (prepayment can happen anytime during this period without penalty). During this three (3) year period, the City is required to pay quarterly interest payments on the loan, which they have and have subsequently been reimbursed for by the developer. Principle payments on the loan are to be paid from land sale proceeds from the Phase IA and I13 for -sale housing components and any TIF revenue bond proceeds not needed to repay the developer for qualified TIF costs. In April 2007, the City made a prepayment on the loan in the amount of $738,903, which represented non -obligated TIF revenue bond proceeds from the take out financing for the Phase IA housing development. This leaves a balance of $2,611,097 to be paid on the loan. The developer intends to make additional payment on the loan this fall when they begin construction on the first building in the Phase I13 for -sale housing development. This amount will be approximately $1.8 million, leaving a balance of approximately $800,000 on the loan. Since the timing of construction of the Phase II3 housing won't commence until after August 27, 2007, the developer has requested that the City request a two-year extension in the term of the loan from Fannie Mae. LEADERS IN PUBLIC FINANCE 3060 Centre Pointe Drive Phone: 651-697-8506 Fax: 651-697-8555 Roseville, MN 55113-1105 skvilvang@ehlers-inc.com