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City Council Regular Meeting Minutes September 14, 2010 Page 3 1 of the City of St Anthony Minnesota and Apache Redevelopment, LLC. ("The 2 Developer) Stacie Kvilvang Ehlers & Associates presenting_(tabled from the August 3 10 2010 city council meeting) 4 5 Ms. Stacie Kvilvang, Ehlers & Associates, discussed the history and improvements of the Silver 6 Lake Village Redevelopment, as well as the history of the development agreement for Phase III 7 Silver Lake Village Redevelopment. Ms. Kvilvang reviewed that at the August 10, 2010 City 8 Council meeting, Council requested a work session regarding the Phase III Development 9 Agreement. At the meeting, Council provided staff direction on the following proposed deal 10 points: 1) Further refinement of the definition of commencement of construction; 2) Priority of 11 repayment to City for the Fannie Mae loan with regards to the Phase IA make up note. 12 13 Ms. Kvilvang discussed staff meetings with the developer and the August 30, 2010 Council work 14 session discussion on the proposed terms of the Phase III Development Agreement. She 15 provided an overview of the following changes discussed with the City Council at the August 30, 16 2010 work session as they relate to the memorandum discussed at the August 10, 2010 City 17 Council meeting: 18 2. Surviving Provisions of the Phase I Development Agreement 19 a. Below Market Profit Tax Increment Assistance Increase 20 5. Phase III Tax Increment 21 a. Use and Amount of Increment 22 Phase IIIB 23 Phase IIIC 24 25 Ms. Kvilvang advised that based upon Council direction, a provision has been added to the 26 agreement to require the Developer to prove to the City's satisfaction that the Developer has 27 project financing and the Developer has an actual ownership interest in the land (at least a 28 purchase agreement). 29 30 Councilmember Stille observed that from the developer's perspective, many things will need to 31 go very well in relation to the make up note provisions. He stated he believes this is a fair 32 compromise. He noted the City is in agreement with going forward with Phase IIIB and Phase 33 IIIC. They are providing a carrot for the developer to complete the project, which someone will 34 need to do if the current developer does not. The profit for the developer will not be a windfall; 35 in comparison to the values it will likely be in the neighborhood of 2% to 5% of the value. 36 37 Mayor Faust noted that the agreement presented at the August 10, 2010 City Council meeting 38 was not acceptable to the Council, and that Ms. Kvilvang and Mr. Lindgren have renegotiated 39 with the developer. He pointed out that the developer has completed the phases that include 40 Wal-Mart and the commerce buildings, the townhouses and cottages, and that the redevelopment 41 is at the tail end. 42 43 Councilmember Gray questioned when the City will receive proof that the developer has lost $2 44 million in the project. Ms. Kvilvang replied that this has been requested and the developer is 45 putting together the required paperwork for review. 46 3