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W Mike Morrison Development Agreement— Phase III Silver Lake Village Redevelopment September 14, 2010 Page 2 fully repaid, 100 percent of the increment will go to the Apache Redevelopment LLC. It is anticipated that the amount of increment available for distribution between the City and Apache Redevelopment LLC will be approximately $108,000 (calculated with no inflation). If split, this would mean the City would retain $81,000 and Apache Redevelopment LLC would retain $27,000. If the City is repaid in full prior to the development, then $108,000 would be available to Apache Redevelopment LLC. Phase IIIC. The increment generated from Phase IIIC (Fuel Mart and Fuel Mart Car Wash) will be made available to a third party developer if needed. If there is any increment that is not needed by the third party to develop the Phase IIIC project, the excess amount will be split 75/25 to the City and Apache Redevelopment LLC respectively until the City has been reimbursed 100 percent for its investment in repayment of the Fannie Mae loan and reimbursed for administrative costs advanced for the project. After the City is fully repaid, 100 percent of the increment will go to the Apache Redevelopment LLC. It is anticipated that the amount of increment available for distribution between the City and Apache Redevelopment LLC will be approximately $325,000 (calculated with no inflation). If split, this would mean the City would retain $243,750 and Apache Redevelopment LLC would retain $81,250. If the City is repaid in full prior to the development, then $325,000 would be available to Apache Redevelopment LLC. The Development Agreement will state that the principle amount of the subordinated TIF note for these two phases shall not exceed $433,000 (combined amount of the two phases). In addition, Apache Redevelopment LLC is required to provide documentation to the City that shows there was a loss of at least this amount to them for the overall project. As you recall, the current agreement states that the Developer has until December 31, 2011 to "commence construction" on any one of the three phases. The current language stated that the definition of commence construction was pulling a building permit for a particular phase. Based upon direction from the Council, we have added a provision that they have to prove to the City's satisfaction that the Developer has project financing and the developer has an actual ownership interest in the land (at least a purchase agreement). Please contact me at 651-697-8506 with any questions. cc: Jay Lindgren —Dorsey & Whitney File