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Memo To: Mark Casey — Executive Director From: Stacie Kviivang Date: June 26, 2012 Subject: Amendment to Dominium PAYGO TIF Note — The Landings Legal Counsel and myself are recommending making the following two (2) changes to the existing pay-as-you-go (PAYGO) TIF Note between the HRA and Dominium: 1. Change how any unpaid interest is handled; and 2. Change the end date of the receipt of tax increment On October 19, 2004 the City issued Dominium a pay-as-you-go (PAYGO) TIF Note in the principal amount of $4,464,407, payable at 6.75% interest. Payments on the Note were to begin on August 1, 2006 and be payable through February 1, 2032 (26 years). The Note was to accrue interest from the date of issuance to the first payment date and then the accrued interest was to be added to the principal amount of the Note. Accrued interest from October 19, 2004 until August 1, 2006 was $467,449, thus the new principal amount of the TIF Note was $4,931,856. The Note also states that if the annual TIF generated is not sufficient to pay accrued interest on any given payment date, that the unpaid interest shall accrue and be added to principal. TIF generated from the project was not adequate to pay accrued interest on the Note for the payment dates of August 1, 2006 through February 1, 2008, due mostly, in part, to timing of completion of construction. Based upon how the TIF Note is currently written the City would need to add approximately $433,000 to the principal amount of the Note to -accommodate inadequate increment to pay accrued interest on these dates. The intent of the Note was that interest would only accrue and be added to principal up and until the first payment on August 1, 2006, which is the typical way that TIF Notes are structured. Dominium has agreed to changing how the Note is written to reflect this. In addition, when the TIF Note was issued in 2004, the City was not anticipating receiving any increment from the entire redevelopment area until 2006. However, the City received TIF in 2005, due to inflationary value increases on the existing parcels within the TIF District. Therefore, the new end payment date on the TIF Note should be reduced by one (1) year to February 1, 2031. This provides Dominium with only 25 years of TIF, rather than the 26 that was anticipated. Based upon payments made to date and payments anticipated through the term of the Note, the entire principal amount of the Note will not be paid. The remaining balance will be approximately $2,953,792. Please contact me at 651-697-8506 with any questions. EHLERS LEADERS IN PUBLIC FINANCE wwr,ehlers-inc.com Minnesota phone 651-697-8500 3060 Centre Pointe Drive Offices also in Wisconsin and Illinois fax 651-657-8555 Roseville, MN 5511 3-11 22 toll free 800-552-1171