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He pointed out this is the type of project the residents have said they wanted, and it is a very <br /> difficult project to bring in. The new structure removes the backstop on retail and includes a <br /> request for approximately $7,000,000 in construction financing. He explained this catalyst <br /> project would include a vertical mix of uses, would support both existing and new retail uses, <br /> and make use of the existing and the proposed ramp. He said he heard comments repeatedly at <br /> the Game Fair that residents are in favor of the rail stop and are hoping that something more will <br /> be developed as a result. <br /> Stacy Kvilvang, Ehlers and Associates, reviewed the financial components. Total development <br /> costs have increased by approximately $1.2 million. Eighty percent of the debt service must be <br /> repaid by the City, and it can be repaid by TIF funds from District 14, which is The COR. If <br /> there is not enough funding to pay the debt service, the monies will have to be levied and <br /> taxpayers would need to pay. She noted the risks are that the City is entering into a loan <br /> situation. The building could have a higher vacancy than anticipated. There could be lower <br /> rents, or the inability to increase rents to keep up with expenses. <br /> Development Manager Lazan reviewed how the shortfalls would be covered. There will be <br /> rental revenues; corporate contributions to operating an LLC; David Flaherty has a personal <br /> guarantee with PNC and the HRA; TIF 14 can be used; Allina and the VA Clinic and other <br /> projects within the District can be accessed. He added that other funds could become available <br /> such as the possibility of land sales. The guarantees are powerful. He emphasized the taxpayer <br /> would only be levied in a complete last resort and there are numerous levels before that would <br /> happen. <br /> Commissioner Tossey questioned where Mr. Flaherty's assets would go before his personal <br /> guarantees to PNC and Ramsey were paid. <br /> Development Manager Lazan stated Mr. Flaherty is personally and corporately responsible, and <br /> his assets would not go to anyone else first. Due diligence was performed to assure his personal <br /> worth. <br /> Ms. Kvilvang stated in the event the City is left with bonds to pay, she noted there are some <br /> options. She explained the TIF funds as projected should cover the debt service. <br /> Executive Director Nelson stated the question has been asked why PNC is not financing more of <br /> the project and it is because there is a lack of comparables in the area. This is a different product <br /> type. <br /> Commissioner Tossey pointed out that if it gets to the TIF District, it is affecting the taxpayers. <br /> There are still roads to pay for and other projects could be delayed if TIF funds are used. He <br /> stated he does not think the City should participate in financing. <br /> Commissioner Ramsey commented he does not see how the project could fail, and he does not <br /> expect the rents will decrease to the point where citizens are affected. <br /> Housing and Redevelopment Authority / August 23, 2011 <br /> Page3of6 <br />