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23 Mike Mornson Fannie Mae Loan Repayment and Amended Interfund Loan June 22, 2010 Page 2 resolution increasing the interfund loan cap to $500,000 to cover some anticipated costs to the district. On June 23, 2009, the HRA approved an amended interfund loan resolution to increase the amount to $1 million to cover Fannie Mae loan repayments. To date the IIRA has paid approximately $958,000 to Fannie Mae under the interfund loan resolution. The District is now generating funds since most of the development is completed. However, TIF generated from each development is already pledged to pay for obligations (PAYGO Notes and TIF Revenue Bonds). The only unobligated cash that is available to pay for any current or future TIF district expenditures/obligations is the TIF generated from parcels that have not been developed upon and the HRA's five (5) percent fee it retains from the projects that are constructed. To date, the majority of the unobligated cash has been utilized to pay administrative costs of the District. The next payment of approximately $210,000 is due on July 1, 2010, to Fannie Mae. 'Phis payment would place the HRA expenditures over the authorized amount under the previous interfund loan of $1 million. In order to make this payment and future Fannie Mae payments staff is recommending increasing the interfund loan resolution to $2,630,000. It is anticipated that the interfund loan will be repaid fiom TIF generated from the future development in the district and the remaining portion fiom land sale proceeds as shown in the chart below: Repayment of Interfund Loan Interfund Loan Amount $2,630,000 $2,630,000 Net Proceeds of 40 -Unit Co -Op TIF Note (Phase IIIA) ($465,000)__ $2,165,000 Net Proceeds of 60 -Unit Sr. Apt TIF Note (Phase IIIA) ($570,000) $1,595,000 Land Sale City's Parcel - 60 Sr. Apt Units Phase IIIA ($595,000) $1,000,000 Future Unobligated 3-5 TIF ($1,000,000) $0 The priority for repayment is the $1.6 million to the Water Filtration Fund, which current TIF and land sale proceed estimates are adequate to repay this portion of the loan. The remaining $1 million advanced from the Chandler and Apache Cub TIF Districts will only be repaid if TIF and land sale proceed estimates for Phase IIIA are more than anticipated and/or there is any future unobligated TIF available from other developments within the TIF district. As with other interfund loans, the HRA will reimburse itself for the above referenced costs (as they are advanced) in the current principal amount, together with interest at the rate of 4% per annum. The interest rate is set at the statutory maximum and will be adjusted annually on January I" of each calendar year. Payments will be made with available tax increment on February 1 and August 1 of each year. The HRA will be considering approval of a resolution increasing the interfund loan cap to $2,630,000 at their meeting immediately following the City Council meeting on June 22, 2010, in order to accommodate these expenditures. Therefore, the City Council's approval of the attached resolution is made contingent upon approval of the I -IRA at their meeting. Please contact me at 651-697-8506 with any questions. CC: Jerry Gilligan — Dorsey & Whitney