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HRA does not agree with bonding it would have to come up with close to $9 million on its own. Commissioner Tossey stated he felt the City should never have agreed to a $3 to $4 million parking ramp and had put the "cart before the horse." He stated he hates governmental involvement in financing, but now the HRA has agreed, in a contract, and approved a ramp expansion for them, not for the train station. Commissioner Tossey expressed his indecision about whether to vote in support or against this item. Commissioner Wise stated the City had looked for funding for a train stop, lobbied for the train stop, and brought it up many times that there would be an apartment complex with many people likely to be in a certain demographic living in suburbia but working downtown. The City used that situation to get $14 million of funding to build a train stop. Commissioner Wise stated if the HRA does not move this item forward, he believed Ramsey would lose all credibility. Commissioner Ramsey stated it is true that the City pitched funding for the rail stop saying that residents from this apartment complex would be riding the train. The City had money for the parking ramp expansion and if he had thought this project would not move forward, he would have supported giving back that federal money. Commissioner Ramsey stated he is surprised it has come to this point because he firmly believed that on September 27 it was a done deal, the contract was signed and delivered, and should be honored. Motion by Commissioner Ramsey, seconded by Commissioner Wise, to adopt Resolution #HRA 12 -02 -004, for sale of up to $7,450,000 Taxable G.O. Tax Increment Bonds, Series 2012, and approval of the Debt Subordination Agreement with PNC Bank for private financing. Further discussion: Ms. Kvilvang stated consideration is for the sale of up to $7.45 million in tax increment bonds issued pursuant to Statutes 469 and 475, the tax increment statute and general bonding statute. Under Statute 469, the HRA can issue bonds without referendum because 20% of the principal expected to be paid is from tax increment of the project to construct the apartments. Previous consideration had been given to three -year temporary bonds because by the end of year three, the development would be complete and the first lender would then put a larger mortgage on the project, taking out the City's investment. Ms. Kvilvang explained that in looking at the tight three -year timeline to get to the point of stabilization for final financing, and in light of the current 60 -year low rates, the Development Team suggests the option of a ten -year bond with a three -year call. Ms. Kvilvang explained the difference between the two is that there is flexibility in a ten -year bond. The cost differential is predominantly in capitalized interest of about $240,000. However, if the HRA had to issue a second temporary bond, it would cost $100,000 so the net difference is about $140,000. It was noted that Flaherty & Collins and PNC don't have a say in the form of bond that the HRA considers and there would be no out -of- pocket costs for the City since it is project costs. Ms. Kvilvang asked the HRA its preference in bond term. Commissioner Elvig asked whether the net cost difference of $140,000 would be passed to the developer. Mr. Bray explained the developer's obligations to the City are in the promissory, notes that are separate from the bonds. Regardless of the source of funds or type of bond to raise money to lend to the developer, the developer will repay the principal amount, up to $91,000 for the cost of issuance, and a flat interest rate of 6.27% with an increase to 8.27% if not paid at the 18 -month point. It was noted those interest rates do not vary with the HRA's interest rates. Commissioner Elvig asked whether only $91,000 would be covered by the developer of the Housing and Redevelopment Authority / February 28, 2012 Page 4 of 7