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but the request is to give the $500,000 to pay for the bond pay down, when it becomes due. It is not developer fees. Commissioner Elvig stated he has concerns with this because it was his understanding this is a developer overhead fee but he did not see that in the initial proforma. Commissioner Elvig stated he saw developer fees of $3 million. He asked what is the split between rates/values applied towards the architectural draws and what is remaining that PNC Bank will be holding. Commissioner Elvig stated he thinks that when the certificate came forward for developer draws, it got split between overhead fees and only $1.5 million remains in developer fees. He stated he does not want developer fees paid before the HRA is paid. Finance Director Lund noted the line item for developer overhead fees on the schedule of values. Commissioner Elvig stated he would like to see the proforma from when he voted on this. He stated the HRA is paying $500,000 for overhead and they are saying they don't need that money so the loan was too much. Development Manager Lazan stated if the HRA was the only lender, he would be more concerned. The request means F&C will get to PNC Bank money faster and the HRA lends less. Commissioner Elvig stated he wants to be sure that these funds were not pooled in another area initially. He recalled there was to be $3 million of developer fees initially and he did not want that paid out until certain terms were met and the HRA got its money. Commissioner Elvig stated the idea was to get Mr. Flaherty to bring in institutional fresh money. At this time, he was concerned the request was to use HRA money to pay the HRA and to give them a $250,000 credit. Commissioner Elvig stated it appears the HRA is loaning the City's money to pay down the note. Development Manager Lazan stated it gets confusing but they have to bring a certain amount of capital and PNC Bank is allowing them to draw on the reserve. When F&C makes the final draw, they will have drawn $500,000 less, i.e., the principal will be reduced by $500,000. Ultimately, if they come up with the other $1.5 million in cash, they used these funds for a credit but the HRA's loan is still reduced and it is a zero sum gain. Development Manager Lazan explained it is the same whether the HRA extended all $7 million and they wrote the HRA a check for $500,000, or if the HRA loans them $6.5 million. The net is the same. Commissioner Ramsey stated this is new money because it is coming from PNC Bank. Finance Director Lund explained the bond is for $6.8 million so, if approved, the HRA will pay them for $6.3 million, and keep the $500,000. Commissioner Elvig stated the agreement was that Mr. Flaherty would bring institutional dollars (equity) into the project. He is concerned they are now `washing money" by using HRA money to pay us back. Commissioner Elvig stated he has a problem with PNC Bank allowing this and he wanted to see where the numbers were originally. Housing and Redevelopment Authority / October 2, 2012 Page 3 of 9