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from a financial standpoint, the developer has a very strong balance sheet. It is important for the <br />City Council to recognize that this project is highly leveraged. That's not to say that the <br />developer does not have a substantial amount invested. <br /> <br />Mr. Umess pointed out that the developer has expended over $3 million; that demonstrates <br />financial ability. <br /> <br />Councilmember Elvig stated this shows how bold the developer is. <br /> <br />Councilmember Cook stated that we are looking at it as a risk, but the developer may not be <br />looking at it as that much of a risk. <br /> <br />Mr. Urness stated that the lender is very enthusiastic about this development. <br /> <br />Mayor Gamec inquired if everyone feels pretty confident about all of this and if there are any <br />questions. <br /> <br />Mr. Mulrooney stated that he usually tries to determine how real the commitments are. He feels <br />a lot better about the commitments since meeting with the lender and learning the history the <br />lender has with Mr. Netegaard and his ability to perform. The bank's credibility is on the line <br />too. <br /> <br />Councilmember Zimmerman inquired if anyone could see any way the City could get hurt <br />because the interest rates go up or the building slows down? <br /> <br />Mr. Urness stated that they have looked at all this - does the developer have a financial plan - <br />can he get it done. You are not working on hypothetical - there are closings scheduled. The <br />developer believes this loan could get paid with just the housing development alone. <br /> <br />Councilmember Elvig stated that we are looking at Phase I as about an $8.2 million investment. <br />The net to the City is about $2 million. There will be $300 million in residential alone. He <br />thought it all sounded good. We have an assessment on every single property that gives us a <br />position over the bank. The assessments have to be paid before the land can sell. <br /> <br />Mr. Mulrooney commented that the unknown is the commercial side of this - Mr. Netegaard's <br />expertise is residential. However, residential development is an attraction for commercial <br />development. <br /> <br />Mr. Engen stated that we are looking for players to bring in on the commercial side. <br /> <br />Mr. Mulrooney added that there is no doubt in his mind how quickly housing will build out - <br />unless the City would have to slow it down because of not being able to keep up with <br />inspections, etc. <br /> <br />Councilmember Cook stated that with the new organization and added staff, we are trying to gear <br />up for that amount of building. We have been gearing up for about six months now. <br /> <br />City Council Work Session/September 15, 2003 <br /> Page 7 of 10 <br /> <br /> <br />