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pay builders fees or developers fees before the HRA is paid or to allow it to be used to capitalize the HRA loan. He asked if it is going back to Flaherty & Collins as equity. Ms. Kvilvang stated builder's overhead and profit are going to Flaherty & Collins as the builder for doing the construction and drawn appropriately over the loan. The $500,000 request is part of the developer fee to Flaherty & Collins for time spent on the project but they are choosing to prepay the HRA instead of keeping it for themselves. Acting Chairperson Elvig asked about the other line items. Ms. Kvilvang advised it is not viewed as leakage or equity dollars back to Flaherty & Collins. Rather, they are valid expenditures and appropriate within the realm of the proforma. Bond Counsel Tom Bray of Briggs & Morgan advised that the loan documents allow the developer to recover costs related to construction. Nothing in loan documents prohibit Flaherty & Collins from taking draws their construction company have incurred. Acting Chairperson Elvig asked why the contractor fee was shown as zero on the proforma. Ms. Kvilvang explained the proforma includes a larger construction cost that includes contractor overhead and contractor fees. In the actual draw, that detail was broken out. Acting Chairperson Elvig stated he is satisfied that the extra dollars are not coming from profit to Flaherty & Collins; however, he remained against the request. Motion by Commissioner Wise, seconded by Commissioner Tossey, to accept the $500,000 early principal reduction payment, direct the team to execute the agreement, and transfer funds as outlined in the agreement. Motion carried. Voting Yes: Commissioners Wise, Tossey, Backous, Ramsey, and Strommen. Voting No: Acting Chairperson Elvig. Absent: Chairperson McGlone. Chairperson McGlone returned to Council Chambers and his seat at the dais at 8:33 p.m. 5.01: Consider Alternative Development Scenario — Sunwood Retail Development Manager Lazan reviewed the staff report. Commissioner Elvig noted part of the proceeds are needed to purchase Wiser Choice Liquor for $1.2 million and asked about the net proceeds. Development Manager Lazan explained at a previous meeting, the HRA determined it would not have a contribution towards the road and that the proceeds for the sale of Lot 3 would go for the Sunwood Retail project. Commissioner Strommen asked if staff assumes no deal on Lot 3 or a delay. Housing and Redevelopment Authority / October 16, 2012 Page 5 of 11