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He pointed out this is the type of project the residents have said they wanted, and it is a very difficult project to bring in. The new structure removes the backstop on retail and includes a request for approximately $7,000,000 in construction financing. He explained this catalyst project would include a vertical mix of uses, would support both existing and new retail uses, and make use of the existing and the proposed ramp. He said he heard comments repeatedly at the Game Fair that residents are in favor of the rail stop and are hoping that something more will be developed as a result. Stacy Kvilvang, Ehlers and Associates, reviewed the financial components. Total development costs have increased by approximately $1.2 million. Eighty percent of the debt service must be repaid by the City, and it can be repaid by TIF funds from District 14, which is The COR. If there is not enough funding to pay the debt service, the monies will have to be levied and taxpayers would need to pay. She noted the risks are that the City is entering into a loan situation. The building could have a higher vacancy than anticipated. There could be lower rents, or the inability to increase rents to keep up with expenses. Development Manager Lazan reviewed how the shortfalls would be covered. There will be rental revenues; corporate contributions to operating an LLC; David Flaherty has a personal guarantee with PNC and the HRA; TIF 14 can be used; Allina and the VA Clinic and other projects within the District can be accessed. He added that other funds could become available such as the possibility of land sales. The guarantees are powerful. He emphasized the taxpayer would only be levied in a complete last resort and there are numerous levels before that would happen. Commissioner Tossey questioned where Mr. Flaherty's assets would go before his personal guarantees to PNC and Ramsey were paid. Development Manager Lazan stated Mr. Flaherty is personally and corporately responsible, and his assets would not go to anyone else first. Due diligence was performed to assure his personal worth. Ms. Kvilvang stated in the event the City is left with bonds to pay, she noted there are some options. She explained the TIF funds as projected should cover the debt service. Executive Director Nelson stated the question has been asked why PNC is not financing more of the project and it is because there is a lack of comparables in the area. This is a different product type. Commissioner Tossey pointed out that if it gets to the TIF District, it is affecting the taxpayers. There are still roads to pay for and other projects could be delayed if TIF funds are used. He stated he does not think the City should participate in financing. Commissioner Ramsey commented he does not see how the project could fail, and he does not expect the rents will decrease to the point where citizens are affected. Housing and Redevelopment Authority / August 23, 2011 Page 3 of 6